We read through the financial statements and have a few observations, with a hat tip to Marc F. of spcomm who beat us to the punch on many of these points (spcomm membership required):

The bad:

• Our cash position remains bad.  While the disparity between operating cash and accounts payable isn’t nearly as bad as last year (when we had under $200k in cash and almost $3MM in outstanding payables), at the end of 2016 we still had more accounts payable than operating cash.  We also drew down our line of credit by $950k (to pay the public adjuster lawsuit settlement, which was reached in 2015 but paid in 2016) and appear to have used about $1.2MM in reserve funds during the course of 2016.  The coop is also no longer keeping a separate playroom account but has moved the playroom funds into the general operating account.
• Property taxes continue their relentless march to the stratosphere, approaching $10MM and accounting for more than a third of our total expenditures.
• Legal costs are up by almost a quarter million.  We assume this is primarily the result of the garage litigation, where five shareholders sued the co-op to try to invalidate the parking lease with Icon Parking.  The co-op’s motion to dismiss the case (and a motion to recover our fees from the plaintiffs in accordance with the proprietary lease) was fully submitted in September 2016 but the judge has not yet ruled.
• Commercial arrears continue creeping back up at about $100k per year since the massive write-offs of 2014.

The good:

• Operating, repair, and maintenance expenses are down, particularly steam and gas heat, water and sewer charges, maintenance materials and supplies, plumbing and heating, window repair, and landscaping.
• As promised in last year’s financials, the Icon contract resulted in Garage revenue going up by almost $100k.  There is a possibility for that number to increase further if enough shareholders are added to the parking roster.
• Sublet fees are up almost $100k.  This despite oft-repeated false claims by certain shareholders that the Board “lowered” sublet fees.
• Flip tax reached a record high of almost $6.5MM, up $2.2MM over last year.  We expect strong flip tax collections again in 2017, but probably not this high.

Prognosis:

• With property taxes continuing to go up and some major capital repairs on the horizon stemming from the discovery of 60-year-old construction defects in some of the 18th floor terraces, we don’t expect to see break from maintenance hikes in the foreseeable future.
• That said, with the air rights proposal on the table, and (even if we don’t sell air rights) the possibility of refinancing our mortgage in the next year or two, the Board may be able to finance some of the long-term expenses and keep maintenance increases to a minimum.  This already appears to be the mindset of the Board, as they recently passed a 1.5% maintenance increase to go into effect for fiscal 2018 as part of the N+1 budgeting process.