How Deferred Fixes Turn Healthy Buildings Into Financial Risks

The property management industry has transformed dramatically, and three leading executives reveal what it takes to keep NYC buildings ahead of the curve. AJ Rexhepi, CEO of Century Management, Mitchell Slavuter, partner at Delkap Management and Keith Werny, president of FirstService Residential's City Line Management Division, discuss the shift from reactive maintenance to strategic planning. They share concrete examples of buildings that turned compliance nightmares into opportunities, slashed insurance premiums through unexpected methods, and discovered hidden revenue streams. The conversation gets real about manager burnout, the evolving role of superintendents, and why some board-management relationships simply don't work. If you've ever wondered what actually happens behind the scenes when buildings face violations, outdated systems, or tight budgets, this roundtable delivers the insider perspective. Habitat’s Emily Myers conducts the interview.

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Emily Myers (00:43)
Welcome to Habitat's Management Series. I'm Emily Myers, and this is one of several roundtable conversations with the executives of leading New York City property management firms. The topic for this discussion is future proofing in today's market. And I'm delighted to be joined by AJ Rexheppe, CEO of Century Management, Mitchell Slavuter partner at Delkap Management, and Keith Werny president of First Service Residential's

City Line Management Division. Thank you all so much for being here.

A.J. Rexhepi (01:15)
Thank you.

Emily Myers (01:15)
Well, property management often involves responding to immediate concerns and with so much that's urgent, leaks, boiler problems or elevator malfunctions, long-term planning can take a back seat. But it's often that very planning, whether it's strategic capital projects, budgeting or staying on top of compliance that helps prevent or lessen these crises in the first place. We'll explore these topics and more and take a look at some specific examples.

But first, AJ, at Century Management, when you consider future proofing, what's the priority for you?

A.J. Rexhepi (01:50)
me, it goes hand in hand with not only exploring the technologies that's going to future-proof the building, but also save the building money in regard to efficiencies and energy consumption. ⁓ The two topics in my mind go hand in hand.

Emily Myers (02:06)
Yeah, because of course, energy efficiency with local law 97 and the emission caps is a priority for buildings. What misconceptions do you see among boards about what their building can or cannot do?

A.J. Rexhepi (02:18)
I think the biggest misconception boards have is that they have to replace like for like. They don't think out of the box. They don't hire professional or they choose to hire professionals that are only looking for like for like replacements as opposed to thinking broader, thinking how the building can become more efficient, creating redundancy with equipment and also investing in the long-term. Many boards will look at

the lowest cost figure and not look at the payback, whereas sometimes the payback on

cost projects are actually more beneficial.

Emily Myers (02:53)
Okay, so energy efficiency. Keith, the portfolio of First Service Residential City Line division is primarily condos and co-ops in the outer boroughs. And what do you see as the priority when it comes to future-proofing for these buildings?

Keith Werny (03:07)
I like the way how you word it future proofing because years ago you made decisions and it was basically for the now and it would go into the future. Now I think AJ brought up or you brought up local law 97 you have to plan out to 2050. So future proofing your building needs to make smart proactive decisions that are not only going to affect today but going to affect the future.

So you have to partner with your boards to ensure that they understand this and you're making the proper proactive decisions with them going forward.

Emily Myers (03:39)
So, I mean, obviously compliance has changed the landscape of property management. That's what you're hinting at.

Keith Werny (03:47)
Yeah, compliance is huge. So when we all started out in the industry, it, well, at least I'll speak for myself 30 years ago, we primarily dealt with window guards, lead paint notices, fire safety was just at its inception. Local law 11 just started out and then we we had to focus on, permits renewing. That was it. Now it's a multi, multi, multi-million dollar industry.

and you've had to evolve over time. So at first service, at first we had maybe one person with compliance with the manager who was handling it. Then over time we had general counsel overseeing the compliance department because there's exposure and risk there.

Then we were the first company I believe to work with SiteCompli when they were building out their program, which is an amazing program that helps the managers and the compliance departments of the management companies to be able to see real time when violations come in, when permits come in to get hit with emails. Because again, the exposure is getting greater and greater and greater. Now every day there seems to be a new local law. So what we've done, which is a little bit unique, we haven't opt, all of our buildings have to opt into SiteCompli.

comply in getting the reports. And we created a relationship with Cohen Hockman, who is a compliance attorney. So that when it gets past the point of just being notified, if you have to go to court, basically the cost of one violation is our cost for the annual fee for our buildings to be part of it. So that way they'll have a peace of mind and protection that if it has to go to court, they have the ability to have that protection. So it's another layer.

So we have so many different layers involved here and it's really hard for the smaller management companies because they generally don't have the same resources. It's not their fault. It's just the reality of our business. An example of this is we took over a 500 unit building in the Riverdale Bronx area. We took it over, had well over 100 violations. Their fines were through the roof and we had to come up with a plan of, right, how are we going to handle this?

A.J. Rexhepi (05:24)
you

Keith Werny (05:46)
And what we wound up doing is working with site comply, getting the report, looking at the violations, AJ brought up low hanging fruit before we address the low hanging fruit. And then we determined where we needed Cohen-Hockman involved in order to go into court and try to reduce the fines that we didn't have a choice with dealing with. So all they had to do with us is pay for their retainer fee, which was minimal, would have cost them tens of thousands of dollars if they had to hire an attorney. And then having a strategic plan.

A.J. Rexhepi (05:53)
you

you

you

Keith Werny (06:13)
going forward and dressing these one by one. I can tell you we're still working on it but we've made progress and but if you don't have that plan it's going to be tough and that's going to tie into insurance too soon and I'll talk about that maybe later.

A.J. Rexhepi (06:15)
you

Emily Myers (06:24)
Yeah.

Yeah, before we get to that, Mitchell, perhaps you can just share what Delkap management sees as the best way to set buildings up for the future. We've talked about, you know, this compliance landscape changing. I'm sure that's a priority for you too.

A.J. Rexhepi (06:27)
you

Mitchell Slavuter (06:38)
Sure. Yeah, so I think it's no secret that the market and the space is changing and the requirements and so on. So similarly to piggyback off of what both AJ and Keith had said, I think that technology is going to be more and more important and staying ahead of the curve and learning how to be more efficient on behalf of the buildings that you're managing. I also think that transparency is going to become more more important as well.

people are creatures of habit. so changes is not easy for most. And so getting adapted to new local law projects that are going to be a requirement, getting adapted to having to spend in some cases, you know, a dollar today to save $5 tomorrow is very important, but it's difficult for some people to wrap their heads around that. And so I think that using technology

A.J. Rexhepi (07:09)
Okay.

Mitchell Slavuter (07:29)
to keep shareholders, board members, residents informed of what's going on, keep them involved in the process is going to

make it an easier transition for them, which in the long run, I think will pay off both monetarily in savings for these buildings, as well as compliance. Just like you said, one violation is not worth the cost of preventing that violation. And so...

We're looking at preventative measures and being proactive rather than being reactive and fixing problems. So I think that technology mainly will be the key for that. SiteCompli is a great service. use them. There are other companies that we use. Energy efficiency is going to be huge. It's going to be a big moneymaker for the city. And so we're hoping our clients not the ones to front that bill, but, you know, creating,

A.J. Rexhepi (08:13)
So.

Mitchell Slavuter (08:19)
efficiencies by providing technology to prevent waste of energy, heating expenses, water leaks, and so on and so forth, which, know, dollar here, dollar there at the end of the month, it adds up to a lot of money. And so we're implementing as many of these positive changes for our clients to, you know, to help them in the long

A.J. Rexhepi (08:20)
you

Emily Myers (08:38)
Yeah. So, I mean, technology

is obviously has a broad range, but from what I'm sensing, you're talking about really the software that can make boilers more efficient, but also sort of management software. Keith mentioned SiteCompli and having that sort of data pool so that you are on top of where a building stands in terms of its violations and report filing for these compliance issues. that what you're talking about?

Mitchell Slavuter (09:06)
Yeah, so, so, SiteCompli is definitely one of the services that we use. We do have our own ⁓ internal website technology that we built as, you know, as proprietary for our company to provide certain transparencies for shareholders where they can be informed on what's going on at all times. They don't need to call a property manager or call their back office to find out what's happening. They can simply log in on a cell phone or desktop and, and see for themselves 24 hours a day, seven days a week. And it creates ease of mind for them.

A.J. Rexhepi (09:19)
Okay.

Mitchell Slavuter (09:35)
making sure that we're receptive and responsive to any work orders that people need done. Accidents happen, A neighbor over flooded their tub and then leak three floors down. You gotta be able to handle situations quickly and efficiently. And so besides SiteCompli yes, we have our own proprietary software that we use. We partner with different vendors, whether it's energy efficiency companies, whether it's legal firms. ⁓

A.J. Rexhepi (09:36)
Thank

Okay.

Mitchell Slavuter (09:59)
Unfortunately, in this business, buildings will get violations. Companies like Jack Jaffa are very good and popular in the space to help. So we are working with a number of different vendors in this space that are very good, top of their game.

And our job, see it as almost as being a conductor and making sure that all the players in your orchestra are doing their job efficiently and smoothly.

Emily Myers (10:22)
Yeah. I mean, of course, a sort of primary goal is to help a board avoid any financial shocks. Perhaps AJ, do you want to talk to the sort of strategy there for buildings?

A.J. Rexhepi (10:33)
to go to what Keith said, when we first got into the business, we were limited in a lot of different ways, but also the requirements were far less than what we're looking at today. Today, even the most antiquated buildings have the ability to use services that can help them become more efficient, that can help

only energy efficiency, avoid energy waste.

Now, Keith mentioned the compliance aspect. We're working with companies as well, and I'm sure Keith and Mitchell are as well with Parity, with RunWise to try and make the buildings more efficient with the technology that they have or the equipment that they have. For the buildings, the smaller buildings that are prewar that can't afford or don't need a BMS system, we're working with a small company called Super Alert and through sensors that

basically monitor vibration and temperature, they've been able to determine that our water heaters were set too high and too low at set points. So they've been able to modify those set points where we're not wasting hot water. When a pump is about to go or starts to falter, we're able to alert our super by phone and text that there's something wrong with your hot water heaters or your boilers or your pumps. He gets to it before your residents find out.

And that's the key. It's about creating not only the ability to make the building more efficient, but to make your staff more efficient so that they're getting to problems before the residents even know about it.

Emily Myers (12:00)
Yeah, I mean, you mentioned Parity and Runwise and they obviously offer these services where they offer sensor-based technologies to improve operational efficiency. And as you pointed out, preventing those costly accidents or incidents where there's a leak, know, water sensors, that kind of thing.

Actually, AJ, understand you're working with an Upper West Side pre-war co-op.

with a one pipe system notoriously sort of limited in its efficiency and a tight budget preparing for the future with energy efficiency upgrades, what approach are they taking?

A.J. Rexhepi (12:33)
So they've kind of had their eyes opened, unfortunately, through some harsh realities. This is a building that has notoriously run a deficit, has supplemented their common charges via apartment sales, and they're starting to run out of apartments to sell. And what we said to them is, look, you're still on oil, despite pleading with them for 20 years to switch over to gas. Your building's extremely inefficient. It's time for something drastic.

It's a more expensive project, but essentially they are right now specifying a project to remove their old antiquated boiler, remove their oil tank, and go with a heat pump hot water system, put in electric, they're called ice air boxes. They're almost like a P-TAC unit, but they're all electric. They run through the residents' circuit breakers, and they're fairly minimal in terms of maintenance. It just needs a drain line and a vent on the exterior.

And the payback isn't too bad if it wasn't for the electrical upgrade, which is going to need to be done anyway by 2050 as Keith alluded to earlier. It has a real payback. It turns a pre-war building into an energy efficient, now heating and cooling building all of a sudden, making the apartments more valuable. And it takes off a major, major set of costs from the building. It takes away the boiler maintenance, the boiler repairs. It takes away the oil costs.

It takes away the leaks from the radiators and the leak repairs involved with those radiators. then among other things, it takes away the headaches that come with those leaks for the staff, the residents and the board.

Emily Myers (14:02)
So what perhaps are the lessons for boards to take away from this example? I suppose it's that the investment will be worth it. might be painful, but it is worth it. I what's the cost?

A.J. Rexhepi (14:14)
To me, any project today, given where technology has advanced to, need a boiler replacement, you shouldn't just be replacing boiler like for like. Most of our boilers were set up for coal burning, not even oil or gas burning in our older buildings. Now, you should be meeting with an engineer that's looking out of the box to make your system as efficient and redundant as possible. Those have significant paybacks.

look there are still engineers out there that are looking for the low hanging fruit. They want to get in and out and they're not. They're not thinking out of the box. You have to align yourself with the right professionals.

Emily Myers (14:49)
Yeah. Obviously compliance issues, violations we've touched on, these are all liabilities. And of course there is an impact on insurance. Keith, within your portfolio, you mentioned a Hudson Heights co-op that struggled with insurance coverage, seeing premiums increase. Can you tell us a bit more about that building and how you navigated this issue for the board?

Keith Werny (15:11)
I just want to go back on if it's okay Emily on one thing AJ said Everything is on point and also you got to realize too. The state is giving away money now, too

Emily Myers (15:14)
Mm-hmm.

Keith Werny (15:21)
So there are so many opportunities available through incentives. And we just had a firm come in and sort of talk to the team about, you know, looking at VFDs, variable frequency drives. You're looking at these sensors that you're putting in. I love that AJ brought up the payback period because it's generally minimal and your goal is to get to electrification. So take advantage of the opportunities.

Mitchell Slavuter (15:41)
So take advantage.

Emily Myers (15:43)
Yeah.

Keith, you wanted to mention the incentives that are available. And of course there's a window in which they're available. We don't know how long they're gonna be available for. So buildings should really be taking advantage of them.

Keith Werny (15:54)
⁓ 100%. It's available now. The state is very focused on it. You should talk with partnerships with different vendors, making sure that when you're looking at these sensors, you're looking at the return on investment with them.

what type of savings, what the incentive is, and if you get a return on investment of less than six years, generally a home run or a grand slam, and a lot of these are two or three years. So, you know, really, this is the time, and that goes back to looking to have proactive management and not reactive management.

Emily Myers (16:26)
Yeah. Do you want to touch on the building in Hudson Heights with the insurance and how you're tackling the insurance? Because the environment is changing.

Mitchell Slavuter (16:29)
you

Keith Werny (16:29)
Sure.

The insurance

problem has changed significantly, Emily. Again, we talk about compliance. It used to just be a line item on the budget and it was steady. You could usually find ways to get decreases there and you were fine. But you know, your general liability, your umbrella has gone through the roof due to the number of that have been granted by the courts and the number of carriers you have available to you have been limited.

So now it's in an environment where we have to make ourselves attractive to the carriers. So in order to do that, the example of the building, it was a building we recently took over. And when we looked at, an analysis of their pricing, their insurance looked very high.

So when we took over, we had the manager go walk the building and see if there were any trip hazards. Is there a walking around the exterior building, anything that they saw? There was nothing. They went to the boiler room and the mechanical rooms. Everything appeared to be in order. So we have a program with Fireman's Fund and other carriers that we work with. And we felt that this would be a prime candidate. They were originally declined on their renewal.

So we did our pre-work, we submitted it directly to the carrier, and ultimately on the general liability and umbrella side, we're able to save them over $40,000 in premium. We were also able to increase another challenge now, which I'm sure Mitchell and AJ are dealing with as well, is on the umbrella side, used to be able to get 100 million, 200 million, get whatever you wanted for the most part, and there was incremental increases.

Now, you know, 20 million is generally the max, and then you have to get multiple layers if you're going to go higher than that. So, one of the benefits through, our partnership with Fireman's Fund is they are able to get $100 million in umbrella coverage. So they got that as well, and they also had additional flood coverage. So you need to really look at it's not just looking at the premiums. It's ensuring that you have the right coverages in place.

And again, to make yourself attractive, it's not just walking the building, identifying the risk management. It's also making sure internally that you have a process that you are making the carriers feel comfortable with risk mitigation. And when you're doing a major capital project or you have service contracts, a basic work, you got to look at those policies and make sure that there are no exclusions in there.

and you'll find the light on the capital side when you're doing these big projects, you want to make sure that they're being looked at closely and you have to have a team in place in order to do so. You know, we have an insurance team, we deal directly with the carriers, but that exposure to the building can be monumental and especially in today's time. So we felt coverage was really successful because we'd saved premiums, gotten better coverage. And again, they're in the program because they're going to be, you know, doing these other things in order to minimize the risk for the carrier in the building.

Emily Myers (19:20)
So just so I fully understand and so our listeners understand, what you're saying is that they were able to access a program that perhaps isn't available through a traditional broker, but through a relationship that you have. And basically by agreeing to another level of risk mitigation, that reduces the carrier's risk, they were able to get the coverage that they needed.

Keith Werny (19:41)
Yeah, with this particular carrier there, the reason why they're able to remain competitive with their rates is they are very focused on risk mitigation. And if you don't comply, they will remove you from the program. So, but it's such a great program. And that's where I see the industry going as well because of all these claims. they don't want to make these payouts. They don't have to, they want to make sure you're doing your job.

So you got to do your job, got to do your due diligence. And if you do so, you know, you can better manage. It's not going to stop it, but better manage what's going on with rates in the industry.

Emily Myers (20:12)
So the takeaway for boards here is really to be meticulous about repairs, maintenance, staying on top of compliance and violations.

Keith Werny (20:17)
Yeah. And reviewing

the contractor's insurance that's coming into the building because you want to make sure if there is a claim, you minimize the possibility of it going on the building's insurance and stays on the contractor's insurance.

Emily Myers (20:30)
Okay. Mitchell, Delkap took on the management of a 150 unit, 15 story condo earlier this year. What problems did you identify and how have you been able to solve them so that the building is better prepared for what's to come?

Mitchell Slavuter (20:43)
Yeah, so they've had some serious issues, mainly with some of the vendors that they had on Mechanicals.

down quite often, more often than necessary. initially when you take over a new building, I think that it's important to know it's delicate, right? You're not there to make waves and start turning this place upside down. So we wanted to review all of their policies, review all of the relationships that they're working with and make sure that the vendors are doing the right jobs for them. The issue that they were having with the elevators, as an example, is

they were having problems with some of the pulleys in the lines. And so the same repairs we noticed were being done on a quarterly basis, essentially. This went on for a number of years. And so that obviously is a red flag for us. And so we wanted to bring in a few other people to give second and third opinions and so on and so forth. Ultimately, we found that our suspicions were in fact correct and the problem that was being reported is not the actual problem. And there was a billing issue at that point for the building. So they were bleeding money.

and unnecessarily. that was changed. We had to reposition staffing. They had 24-hour doormen and so on and so forth. We tried to cut back a little bit, maybe go down to 18 hours and provide virtual doormen for remainders to cut costs. they were going into doing a local law 11 project and so they were retaining bids from prior local law 11 projects they had over there.

very expensive, were able to reach out to certain partnerships that we've had with people that we worked with over the years. We were able to save them significant money. We're talking on a building that size, we've saved them nearly half a million dollars. It's a lot. so, what it comes down to, what I find when I experience things like this, this is one building as an example, and this has happened more than once, of course, is I think that eventually if you are able to provide

the right guidance and you have the right relationships that you can use due to the volume that you do and benefit your clients by negotiating better terms for them, obviously without sacrificing inequality. Ultimately, they end up saving a lot of money and then those resources can then be used for projects that they have either on the docket right now or upcoming such as these energy efficiency projects that we talked about and so on and so forth. It never ends — the building doesn't last forever.

⁓ I think that it's always important to know that if you can save a little bit today, that doesn't mean that you go spend it in Vegas. That means that you reinvest it back into your building and stay ahead of the game.

Emily Myers (23:03)
Yeah, I mean, obviously, it all comes down to the budget, doesn't it, in many cases. there anything with this building

Mitchell Slavuter (23:07)
you

does.

Emily Myers (23:10)
you know, were there any sources of revenue that they could tap into that puts them ahead?

Mitchell Slavuter (23:15)
Yeah, sure.

Yeah, there was a missed opportunity there with with revenue. So, for instance, we looked into providing billboard advertising space for them. We've looked into They were undercharging actually for parking as an instance. Right. So it was just not in line with market costs in that area. So, you you can very easily create more revenue by just bumping up parking charges. They were not

which again is not necessarily terrible for the people living there, but you know, simple fees, application fees for people that are moving in, they were not charging subletting fees. And it turned out that the building had a very large percentage of owners that were not living there. And unfortunately, you know, even from an insurance perspective, I think as Keith was mentioning earlier, too high of a tenant population, insurance carriers don't really like that. And so, you we were able to implement certain changes there, which created additional revenue at the same time.

I want say deterred people from renting, but it created incentive for people to want to buy these units to actually live in. And they ultimately take better care of the building as well. They have a vested interest at that point. So these are just a couple of examples.

Emily Myers (24:18)
Goodness. I mean, perhaps AJ, do you want to reflect a little bit on recent changes to the role of management and where we might be headed? mean, thinking about the future, thinking about the next five, 10 years, how do buildings prepare?

A.J. Rexhepi (24:31)
It's been a roller coaster ⁓ in terms of changes. I can certainly speak for Keith and myself that when we first got into this business, it was about bandaid repair, then keeping costs as low as possible, and just really dealing with what was coming at you in the now. To Keith's earlier point about preparing for 2050, I think any property manager right now has to be working

in 10 to 15 year increments with their boards boards have to, know, the days of not putting together reserve studies and capital improvement plans because, you know, somebody's worried about being discoverable or being used against you are over. Banks are looking at the minutes very carefully. They're looking to determine whether or not you're deferring costs or deferring capex projects. They're not lending to certain buildings who

Mitchell Slavuter (25:04)
you ⁓

A.J. Rexhepi (25:17)
have either they've deferred capital projects or have violations. The entire market from insurance to compliance to management has completely flipped over. And our job is now to prepare boards for that long run. And if you don't know what's coming down the pike, how can you take out a mortgage and know how much money you need? How can you determine what size of an assessment you need? Otherwise you're just guessing and you're gonna guess wrong.

Having the information and putting money aside through either a capital contribution or maintenance collection or whatever, or combination of all of the above puts buildings in a position to have a plan for 10 to 15 years out. It allows them to address the capital needs that are required by law. But then if you do that, you can also address the elective needs. Doing the hallways, doing the elevators, doing the lobby every eight to 10 years.

in the very least a refresh of those items, which also affect your property value. So it's all intertwined and unfortunately it comes back to that. You need to know what's coming down the pike and you need to prepare for it. And if you don't, You're not looking at what's happening.

Emily Myers (26:26)
Yeah.

Keith, you have any thoughts on what's at stake for buildings that choose to wait it out rather than act now?

Keith Werny (26:33)
⁓ it's either going to pay now or later. And, we were saying before success is in the prep. and I love that we were talking about, being sort of forward thinking here for your boards. And it's essential that that's the way you have to go. You're not focused on the today. You're focused on the tomorrow, the day after that and year after that.

God, we're going already out to 2050, who would have imagined? So it's all about partnerships. Your board is your partner. We didn't even spend enough time with our building staff and how important they are.

If you have the right resident manager or the right superintendent in place, it makes life so much easier because you have an aligned partner with you. Now when you're going back to the boards and if you have the right engineers and the right back office support that's there for you with your added values within the company, you're gonna go back and you're gonna have an alliance and you're gonna be working on a plan and they're gonna feel much more comfortable.

And everything is about trust.

ultimate goal as managing agents is to want to become trusted advisors of our boards. And if we're guiding them with the right advice,

A.J. Rexhepi (27:37)
So,

So.

Keith Werny (27:38)
putting the right in front of them, Mitchell said it before, I'll word it little bit differently, we're generalists and we're general practitioners and we have to bring in the right practitioners who want to bring in your podiatrist or your cardiologist. That's what we have to surround ourselves with. And as an organization, if you have the right people around you,

Mitchell Slavuter (27:39)
you

you

Keith Werny (27:56)
who are looking to do the right thing, you're gonna be in a much greater position to provide immediate success and future success for those boards. So you gotta start now. AJ said it before, it's the today and going forward and thinking about the future.

Emily Myers (28:10)
there seems to be because of this sort of expanding landscape of what is required for management. Any of these topics could have been a podcast on their own and yet we've touched on so many things. compliance, insurance, ⁓ you were talking

finding new streams of revenue for your building. These all fall within the management remit.

we rely on technology then come back to sort of technology to kind of support management.

Mitchell Slavuter (28:34)
So I do think that technology will absolutely be needed to support management, but I don't think it's a replacement for management. I think that you have to be creative these days. You got to know, as Keith was saying, you don't look at today, you got to look at tomorrow.

Emily Myers (28:48)
Perhaps Keith, do you have thoughts on burnout?

Keith Werny (28:50)
I definitely have thoughts on burnout. So things have changed exponentially since COVID. And the work environment of how our board members work, it's generally from home. They're working hybrid work environments, so they're working full time from home. And with that, expectations have changed in how they communicate with their managers.

things have changed exponentially in our environment where managers are getting email fatigue. It used to be pre-COVID, at least to get on the phone and have conversations. They get emails in the middle of the night, they get emails on the weekends, they get emails on every holiday.

And you know what we found as an organization that we have to try to figure out a way to minimize that burnout and provide better communication for our boards. So we created and we rolled out in our other regions is called Resident Support Services, RSS. And the goal of RSS is for shareholder or unit owner questions and the basic questions.

A.J. Rexhepi (29:26)
you

Keith Werny (29:50)
it would go directly to the resident support service team. And in a perfect world, think AJ and Mitchell would appreciate this. If we could have our managers where they're strategizing with their boards and not having to deal with the resident issues as much, they're gonna be much more effective partners in working with the board and being able to strategize going forward. So, as an organization,

That's where we're and also the beauty of it as well, a lot of boards will ask, well, are you documenting when the calls come in, how long it's taken to respond? With us now, with the resident support service team, we document every call that comes in, every solution that was provided, and we can report back to the boards. Now the managers, if they go on vacation,

the calls go to RSS rather than directly to manager. They're getting responses when they're on vacation or off for the day or let's say the assistant property manager is not there. They have somebody who they can go with and generally the response time is with when we document it's 24 hours and the success on the calls about 75 % and if the support agent or RSS agent can't answer it then it'll go to the manager but that gets documented and then it goes back to them. So we're always trying to remain

innovative, on the cutting edge. We found this worked well in our other regions and it's something that we recently rolled out and we're really excited about because we want our managers to be partners with our boards and strategic partners. Hopefully, we don't have to deal with the daily nuances of certain calls and be able to look at the big picture.

Emily Myers (31:20)
Yeah, gosh, interesting sort of how important data is. also providing that data to the boards to be able to say, you know, this is how we are turning these problems around. So super interesting. Mitchell, do you have any thoughts on strategies with dealing with boards who might be resistant or

perhaps when you all accept a new building, are you looking at how receptive a board is to new ideas, to creativity? Is that one of your perhaps requirements for coming on board?

Mitchell Slavuter (31:48)
Great question.

That's a great question. because, you're taking on a new building, it's, it's a new relationship, right? And it has to work for both sides of the partnership here. So on one hand, I think that it's very important for the boards when interviewing management companies to ask the right questions, to make sure that they're finding the right fit for their level of expectations and needs. At the same time, I also think it's important for the management company to know that the building they're about to take on is also a match because

It's our job to know on behalf of the board what this building will need to do or change potentially to get them in the right spot and in a good playing field for the future. That doesn't always mean that the board members are in line with what my vision is or my team's vision, right? And not every match is a good match. So it's very important to be transparent about that when first starting the relationship to let them know that, look, if you're looking for change and that's why we're meeting here today, then

let us paint you a picture of how we see this happening. And we want to know that you guys are either on board with our vision or we're not because, it's very important for our managers and for our staff to know that the people that we're working with are on the same page, they're fans, they're not, people that are going to be against us on every step that we take because that makes for a bad relationship. And so they might not have the same vision and that's okay, but it's better to know that

front, right? And so at the same time, you got to know that the people that you're there to help advise, they're not managers, right? They're not in this

business. This is not their job. Most of them are volunteers, which is very admirable. They don't get paid to sit on the board, right? So they're taking time out because generally they care about what's happening with their properties. And so they may have a certain expectation, but the reality of how to get to that goal might take a different path. And so

It's just very important that we create transparency. Once we get past that stage and start doing business together, then we also want to give them a fair expectation of what changes to be done over the next month, semi-annual, annual, and beyond. And we always want to have checkups, same way you go to see a doctor once a year for a checkup, we want to have checkups with our boards, but more frequently than that, we want to let them know what the successes have been, what the challenges have been.

where we've had to pivot and make changes from where our initial projections may have thought to have been, nothing lasts forever and markets move. And so changes happen, you have to be able to adapt. But that's where the transparency piece comes into play because I think that the more transparent that you can be with the board members and keep them involved in the process as much as possible.

A.J. Rexhepi (34:24)
Okay.

Mitchell Slavuter (34:27)
the easier it is for them to understand the reasons for change or the reasons for a maintenance hike or an assessment or a capital injection, as they just said, whatever is necessary. If it's necessary, it's necessary, right? It doesn't benefit us to have to tell somebody

you got to put up more money, But at the same time, if we don't, then they end up putting up much more money down the road and that does not look good, So transparency is key. And I think that that

will not change with or without technology. Again, I think that technology is there to assist it and make it easier for everybody to see and then have that transparency. So a combination of both is really what's necessary.

Emily Myers (35:03)
AJ, you're nodding there. Any final thoughts as we close out this conversation?

A.J. Rexhepi (35:07)
I think ultimately, the technology is going to help managers become more efficient. It's going to give buildings more data for them to become more efficient. But the underlying

is the increase in expectations, the increase in compliance, the increase in duties, let's call There's only a certain finite amount of time. The increase in expectations.

As Keith alluded to, ⁓ we've all seen it. the only adapting management companies have done in the last 20 years is managers went from managing 10, 11 buildings to nine buildings to six buildings. It's going to continue to have to adapt. And unfortunately, boards are going to have to figure that out also because at the current expectation levels, it's not sustainable, especially when you

throw in the amount of capital planning that's required to deal with local law 97, the more stringent local 11, et cetera, et cetera. Keith hit it on the head when he said, if we have to deal with the resident issues and only dealt with the higher level management issues, that's a job in of itself. Compliance is now its own industry. Everything we used to do all in have sort of siphoned off and become their own.

management companies and what's been forgotten is before all of this, you know, go back to 1990. You didn't get in touch with the manager except by phone, fax or a letter. Your superintendent or resident manager, to me the term is interchangeable as my dad was a super in Riverdale for 46 years. They were the star of that show and they're still very often the highest paid employee of the corporation. They need to be the star of that show again.

They need to be dealing with the resident issues. They can't just sit back and I think most resident managers will agree here. They can't sit back and let the manager run the building or run the resident issues from their desk. The manager has got to deal with all the higher level stuff, the board interaction, the capital planning, the budgeting, the capital budgeting. There has to be some give here. And unfortunately for a client to just say, well, we're the client and you need to adhere to that. It's going to lead to a lot of separation to use Mitchell's.

⁓ analogy this is a marriage and a relationship and it's going to lead to boards making a lot of bad decisions until they finally realize everything has changed and management companies have to understand that their roles are different. You know, FSR, Delkap, Century, where, you know, we're definitely different sizes, but we're, we're some of the bigger companies. We have to say to a client, look, if you're looking for this kind of service, we're not the company for you.

And unfortunately, that's where the industry's gone.

Emily Myers (37:43)
Interesting, gosh, so having the right team, having the boards pick up some slack, adapting really. Well, listen, thank you all so much for this discussion. It's been a great conversation. We've covered a lot from navigating compliance to risk assessment and insurance issues, as well as the very real issue of management overload. I really appreciate you sharing your experiences and being part of Habitat's management series.

Keith Werny (38:07)
Thanks, Emily.

Mitchell Slavuter (38:07)
Thank you very much for

the opportunity.