How to Run Your Building: From Rock Bottom to Recovery

Habitat Magazine July/August 2025

As told by Daniel Wollman, CEO, Gumley Haft

 

When the 50-story East River building decided to find new management, it had a boatload of problems – an unsafe Local Law 11 SWARMP (Safe with a Repair and Maintenance Program) filing, a depleted reserve fund, mounting payables and contractor circling with inflated bids. “The building had minimal to no common charge increases in over a 10-year period, says Daniel Wollman, CEO of Gumley Haft. “That’s impossible. How do you run a building like that? You couldn’t run your house that way.” https://gumleyhaft.com/financial-management/

The consequences were predictable. “They were hemorrhaging money,” Wollman says, and the unsafe SWARMP filing had created an urgency they were unprepared to meet. “They didn’t know if they had to do the project, they weren’t sure how much the project should really cost, and they weren’t sure how they were going to raise the money. They had no handle on their finances.” Despite a lack of funds, the condo was facing a $4.6 million contract to fix the LL11 problem.

Math mix-up. When the board hired Gumley Haft, it tasked Wollman with getting a handle on the condo’s finances and the LL11 project. That proved to be eye-opening, because the numbers didn’t add up. “If a contract is $4.6 million and it’s going to be paid out of 12 months, that’s about $400,000 a month,” he explains. “For a contractor to bill $400,000 a month for a job that is mostly labor, he’s got to have 50 guys working on the building every day, which is a physical impossibility.”

Plus, Wollman adds, “with a building this tall and close to the river, there is approximately one day a week where it’s either too windy or too wet to be working that high up.” The board was being set up for failure. “They were being induced into a contract that the contractor would have never been able to even perform,” he says. The inevitable result would have been change orders, delays and cost overruns on a project the building couldn’t afford in the first place. https://gumleyhaft.com/why-gumley-haft/

“The board bit the financial bullet,” Wollman says. “The contract was rebid as a two-year project, which reflected the actual working conditions and gave the building a longer window to raise the money, as well.”

To address the condo’s cash flow problem, a $500,000 operating assessment was implemented to clear outstanding payables. Alongside this, the board approved a 12% common charge increase to establish proper ongoing funding. While painful, the board recognized the chronic underfunding had created the crisis.

Onward and upward. The condo just got its audit for 2024, and “we basically broke even,” Wollman reports. “We had an excess of $20,000 on a $5 million budget, and they have cash in the bank.” The LL11 project is finishing on schedule, and the building has turned its finances around completely. None of this, however, could have been done with out the board and management working closely. “We made a plan together. I executed part of it, but the board executed the bigger part of it,” Wollman says. “You can’t do this stuff without being partners and being willing to make hard decisions. It’s no different than running a business.”

In taking on management for the building, Wollman was in a unique position. He had managed the condo in the past, and when he got invited back, “I told them this is what they needed to do, and that I really didn’t want to work with them unless they were willing to do it. It was the first time I ever said that to a client.”

At the time, Wollman didn’t know the extent of the condo’s problems, but he wanted an unconditional commitment from the board. “They said yes, and I trusted them. They did exactly what they said they were going to do, and so did I.”

Other boards facing similar challenges should take note: The solution exists, but it requests commitment to do what’s necessary, not what’s comfortable. Short-term pain from proper assessments and increases beats the alternative – a building in financial free fall with no good options remaining.

REALITY CHECK:

Face Financial Facts Early.

Chronic underfunding doesn’t solve itself – it compounds. Regular, modest increases are far less painful than the shock of the large assessments and double-digit hikes needed to catch up.

Question Contractors Who Promise the Impossible.

Always scrutinize timelines and costs that seem too good to be true.

Don’t Just Hire Management: Partner with Them.

The turnaround succeeded because the board and management company became true partners. Management can diagnose problems and propose solutions, but boards must have the courage to implement them.

Short-Term Pain Beats Long-Term Collapse. Sometimes the most responsible decision is the most uncomfortable one.

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