21 due prior to the Closing Date (with the then current installment to be apportioned as of the Closing Date) and the Purchaser shall pay all assessments due from and after the aosing Date. 12. Any declaration or other instrument affecting the Property which the Sponsor deems necessary or appropriate to comply with any law or requirement of the Department of Buildings, the City Planning Commission, the Board of Standards and Appeals, or any other public authority, applicable to the demolition, construction, alteration, repair or restoration of the Building. 13. Agreement of Lease between the City of New York, as landlord, and Battery Park City Authority, as tenant, dated November 24, 1969, recorded December 26, 1969, in Reel161, Page 1, as amended by Amendment of Lease, dated October 19, 1971, by Second Amendment of Lease, dated June 18, 1974, by Third Amendment of Lease, dated October 24, 1974, by Fourth Amendment of Lease, dated October 24, 1974, and by Fifth Amendment of Lease, dated September 10, 1979, and as further amended and superseded by Restated Amended Agreement of Lease, made as of June 10, 1980, between BPC Development Corporation, as landlord, and Battery Park City Authority, as tenant, a Memorandum of which was recorded on June 11, 1980 in the Office of the City Register, New York County in Reel527 at Page 163, as amended by First Amendment to Restated Amended Lease dated as of June 15, 1983 made between Battery Park City Authority, as landlord and Battery Park City Authority, as tenant and recorded on June 20, 1983 in said Register's Office in Reel 696 at Page 424, and Second Amendment to Restated Amended Lease dated June 15, 1983 made between Battery Park City Authority, as landlord and Battery Park City Authority, as tenant and recorded on June 20, 1983 in said Register's Office in Reel 696 at Page 432 and by Third Amendment to Restated Amended Lease dated as of August 15, 1986 made between Battery Park City Authority, as landlord and Battery Park City Authority, as tenant and recorded on October 22, 1986 in said Register's office in Reel1133, at Page 569 (the "Master Lease,). 14. The Settlement Agreement, dated as of June 6, 1980, between the City of New York and New York State Urban Development Corporation ("UDC,), as supplemented by Letter, dated June 9, 1980, from Richard A. Kahan to Edward I. Koch. 15. Memorandum of Understanding, dated as of November 8, 1979, among the Governor of the State of New York, the Mayor of the City of New York and the President and Chief Executive Officer of UDC and Battery Park City Authority, as supplemented by letter, dated November 8, 1979, from the President and Chief Executive Officer of UDC and Battery Park City Authority to the Mayor of the City of New York. 16. Option to Purchase, dated as of June 6, 1980, among UDC, BPC Development Corporation, Battery Park City Authority and the City of New recorded June 11, 1980, in Reel527, Page 153, in the Office of the Register of New York City (New York County).
Transcript
21
due prior to the Closing Date (with the then current installment to be apportioned as of the Closing Date) and the Purchaser shall pay all assessments due from and after the aosing Date.
12. Any declaration or other instrument affecting the Property which the Sponsor deems necessary or appropriate to comply with any law or requirement of the Department of Buildings, the City Planning Commission, the Board of Standards and Appeals, or any other public
authority, applicable to the demolition, construction, alteration, repair or restoration of the Building.
13. Agreement of Lease between the City of New York, as landlord, and Battery Park City Authority, as tenant, dated November 24, 1969, recorded December 26, 1969, in Reel161, Page
1, as amended by Amendment of Lease, dated October 19, 1971, by Second Amendment of Lease, dated June 18, 1974, by Third Amendment of Lease, dated October 24, 1974, by Fourth
Amendment of Lease, dated October 24, 1974, and by Fifth Amendment of Lease, dated September 10, 1979, and as further amended and superseded by Restated Amended Agreement
of Lease, made as of June 10, 1980, between BPC Development Corporation, as landlord, and Battery Park City Authority, as tenant, a Memorandum of which was recorded on June 11, 1980 in the Office of the City Register, New York County in Reel527 at Page 163, as amended by First Amendment to Restated Amended Lease dated as of June 15, 1983 made between Battery
Park City Authority, as landlord and Battery Park City Authority, as tenant and recorded on June 20, 1983 in said Register's Office in Reel 696 at Page 424, and Second Amendment to Restated Amended Lease dated June 15, 1983 made between Battery Park City Authority, as landlord and Battery Park City Authority, as tenant and recorded on June 20, 1983 in said Register's Office in Reel 696 at Page 432 and by Third Amendment to Restated Amended Lease dated as of August
15, 1986 made between Battery Park City Authority, as landlord and Battery Park City Authority, as tenant and recorded on October 22, 1986 in said Register's office in Reel1133, at Page 569 (the "Master Lease,).
14. The Settlement Agreement, dated as of June 6, 1980, between the City of New York and New York State Urban Development Corporation ("UDC,), as supplemented by Letter, dated June 9, 1980, from Richard A. Kahan to Edward I. Koch.
15. Memorandum of Understanding, dated as of November 8, 1979, among the Governor of the State of New York, the Mayor of the City of New York and the President and Chief Executive Officer of UDC and Battery Park City Authority, as supplemented by letter, dated November 8, 1979, from the President and Chief Executive Officer of UDC and Battery Park City Authority to the Mayor of the City of New York.
16. Option to Purchase, dated as of June 6, 1980, among UDC, BPC Development Corporation, Battery Park City Authority and the City of New Yor~ recorded June 11, 1980, in Reel527, Page 153, in the Office of the Register of New York City (New York County).
22
17. Agreement between BPC Development Corporation, Battery Park City Authority and the City of New York, dated as of April23, 1982, recorded October 27, 1982, in Reel 646, Page 700, in the Office of the Register of New York City (New York County).
18. Declaration of Zoning Lot and Development Restrictions dated July 9, 1982 made by BPC Development Corporation and Battery Park City Authority and recorded on 11/4/84 in the Office of the Register of the City of New York, New York County in Reel648 at Page 276, as amended as of 12/3/85 and recorded 12/17/85 in Reel998, page 918.
19. Declaration of Easement dated as of October 29, 1985, executed by Battery Park City Authority and recorded in the Office of the City Register, New York County in Reel987 at Page 949.
20. Declaration of Covenants and Restrictions made by Battery Park City Authority dated March 15, 1984, recorded March 21, 1984, in Reel 776, Page 360, in the Office of the Register of New York City (New York County).
21. Agreement of Lease between Battery Park City Authority, as landlord, and Mariner's Cove Site B Associates, as tenant, dated as of October 25, 1984, a Memorandum of which was recorded on October 30, 1984 in the Office of the City Register, New York County in Reel 843 at Page 1706 as modified by Amendment of Lease dated as of November 7, 1985, a Memorandum of which was recorded on Apri128, 1986, in the office of the Register, New York County in Reel1055, at Page 1755, as further modified by Amendment of Lease dated as of December 3, 1985, Reel 998 on Page 881 and as further modified by Amendment of Lease dated April 3, 1987 to be recorded.
22. Declaration of Restrictions, Covenants and Easements made by and between Rector Park A Associates LP. and Mariner's Cove Site B Associates dated as of December 3, 1985 and recorded on December 17, 1985 in the Office of the City Register, New York County in Reel 998 Page 888.
23. Any encumbrance as to which any New York Board of Title Underwriters member title
insurance company which insures the Purchaser's title to the Unit would be willing, in a fee policy issued by it to the Purchaser, to insure the Purchaser that such encumbrance (1) will not be collected out of the Unit if it is a lien or (2) will not be enforced against the Unit if it is not a lien.
24. Any other encumbrance, covenant, easement, agreement, or restriction against the Property other than a mortgage or other lien for the payment of money, which does not prevent the use of the Unit for residential purposes.
25. Any lease covering the Unit made from the Sponsor to the Purchaser, or if applicable, any lease covering, or tenancy or occupancy of, the Unit and the rights of such tenant(s) and
occupant(s), if any, under the Rent Laws, GBL or other applicable Law.
26. Any violation against the Property (other than the Unit) which is the obligation of the Commercial Unit Owner, Condominium Board of Managers, or another Unit Owner to correct.
23
27. Any other liens, encumbrances and title conditions set forth in the Unit Owner's Title Policy.
28. Standard exceptions contained in the form of title insurance policy issued to Purchaser by
Title Company.
24
EXHIBIT A TO PURCHASE AGREEMENT
WAIVER OF DIPLOMATIC OR SOVEREIGN IMMUNITY AND CONSENT TO JURISDICTION
In consideration of Sponsor conveying title to Unit _ of LIBERTY COURT CONDOMINIUM located at 200 Rector Place, New York, New York 10280 and for other good and valuable consideration to Sponsor, the receipt and sufficiency of which is hereby acknowledged by Sponsor, Purchaser hereby agrees to the following:
1. Capitalized terms used and not otherwise defined in this Waiver shall have the respective meanings ascribed thereto in the Offering Plan, as amended from time to time.
2. Purchaser represents and warrants that the Purchase Agreement for Unit _ and the sales transaction contemplated thereunder is a commercial rather than a public or governmental act, and that Purchaser is not entitled to claim immunity from legal proceedings with respect to Purchaser or any property of Purchaser on the grounds of sovereignty or otherwise under any law or in any jurisdiction where any action may be brought for enforcement of Purchaser's obligations thereunder.
3. To the extent that Purchaser has now or may hereafter acquire such, Purchaser hereby irrevocably waives, in respect of Purchaser's obligations under the Purchase Agreement and the Condominium Declaration and By-Laws, (i) immunity from the jurisdiction of any court (including but not limited to the courts of the United States or any State thereof) and (ii) immunity of Purchaser's revenues, assets or properties (whether commercial or non-commercial) (A) from execution upon, attachment in aid of execution upon, and attachment prior to a judgment of any such court, (B) from setoff, and (C) from any other legal action or proceeding taken to enforce any obligation or liability of Purchaser arising, directly or indirectly, out of or relating to the Purchase Agreement and/or the Condominium Declaration and By-Laws. In addition to the extent not prohibited by the laws of the United States or international law, Purchaser hereby irrevocably waives, in respect of Purchaser's obligations under the Purchase Agreement and/or the Condominium Declaration and By·Laws, "mission inviolability" as same has been interpreted under the Vienna Convention on Diplomatic Relations, 23 U.S.T. 3227.
4. Purchaser, Sponsor and the Board of Managers of the Condominium acknowledge and agree that all disputes arising, directly or indirectly, out of or relating to the Purchase Agreement and/or the Condominium Declaration and By-Laws and all actions to enforce the Purchase Agreement and/or the Condominium Declaration and By-Laws may be dealt with and adjudicated in the courts ofthe United States of America or the State of New York, as Sponsor and/or the Board of Managers of the Condominium elect, and, by execution of the Purchase Agreement, Purchaser hereby expressly and irrevocably accepts for itself and, to the extent permitted by law, in respect of Purchaser's property, generally and unconditionally, the non-exclusive jurisdiction of the aforesaid courts in any suit, action or proceeding arising, directly or indirectly, out of or relating to the
25
Purchase Agreement and/or the Condominium Declaration and By-Laws or in any action to enforce the Purchase Agreement and/or the Condominium Declaration and By-Laws. So far as is permitted under applicable law, this consent to personal jurisdiction by Purchaser shall be self-operative and no further instrument or action, other than service of process in one of the manners specified in this Waiver, or as otherwise permitted by law, shall be necessary in order to confer jurisdiction upon the person of Purchaser in any such court.
5. Provided that service of process is effected upon Purchaser in one of the manners specified in this Waiver or as otherwise permitted by applicable law, Purchaser hereby irrevocably waives, to the fullest extent permitted by law, and agrees not to assert, by way of motion, as a defense or otherwise, (i) any objection which Purchaser may now or hereafter have to the laying of venue or any suit, action or proceeding relating, directly or indirectly, to the Purchase Agreement and/or the Condominium Declaration and By-Laws in the State of New York, (ii) any claim that the State of New York is not a convenient forum for any such suit, action or proceeding, and (iii) any claim that Purchaser is not personally subject to the jurisdiction of the above named courts. Provided that service of process is effected upon Purchaser in one of the manners specified in this Waiver or as otherwise permitted by law, Purchaser agrees that final judgment from which Purchaser bas not or may not appeal or further appeal in any such suit, action or proceeding brought in such a court of competent jurisdiction shall be conclusive and binding upon Purchaser and may, to the fullest extent permitted by applicable law, be enforced in the courts of any state or any federal court and in any other courts to the jurisdiction of which Purchaser is subject by a suit upon such judgment and that Purchaser will not assert any defense, counterclaim, or set off in any such suit upon such judgment.
6. In the case of the courts of the United States of America and the State of New York, Purchaser hereby designates, appoints and empowers the party described below ("Purchaser's Agent"):
as its authorized agent to accept and acknowledge for and on Purchaser's behalf service of process in any legal action or proceeding of the nature referred to in the Purchase Agreement and/or the Condominium Declaration and By-Laws, but for no other purpose. Purchaser acknowledges that the provisions of this Section 6, and the provisions of Section 8, below constitute a "special arrangement for service" within the meaning of 28 USC§1608.
7. Purchaser shall have Purchaser's Agent execute all documents and affidavits reasonably necessary to insure that (i) the designation and appointment of Purchaser's Agent as such shall be irrevocable until one year after the date of the closing of title to the Unit, and (ii) Purchaser's Agent shall not cease to act as the agent for service unless and until, in either case, another agent for such purpose reasonably satisfactory to Sponsor and/or the Board
26
of Managers of the Condominium shall have been irrevocably designated and appointed and Purchaser shall have delivered to Sponsor and/or the Board of Managers of the Condominium or any of its successors or assigns, evidence in writing of such other agent's acceptance of such appointment. Any attempt by Purchaser's Agent to cease to so act shall be ineffective and without force or effect unless the foregoing provisions of this Section 7 shall be complied with.
8. Purchaser hereby consents to process being served in any suit, action or proceeding of the nature referred to in the Purchase Agreement and/or the Condominium Declaration and By-Laws either by the mailing of a copy thereof by registered or certified mail, postage prepaid, return receipt requested to (i) Purchaser at the address set forth in the Purchase Agreement, if mailed prior to the closing of title to the Unit, and thereafter at the Unit conveyed, and (ii) to Purchaser's Agent at the address set forth in Section 6 of this Waiver. Service shall be deemed completed ten (10) days after delivery thereof to such party served. Purchaser irrevocably waives, to the fullest extent permitted by law, all claim of error by reason of any such service and agrees that such service (i) shall be deemed in every respect effective service of process upon Purchaser in any such suit, action or proceeding. and (ii) shall to the fullest extent permitted by law, be taken and held to be valid personal service upon and personal, delivery to Purchaser. Copies of any process or other papers served on Purchaser's Agent shall be forwarded promptly to Purchaser but failure to do so shall have no effect on the effectiveness of such service on Purchaser's Agent. Purchaser undertakes to enter an unconditional appearance within thirty (30) days after the completion of such service.
9. Purchaser agrees to execute, deliver and file all such further instruments as may be necessary under the laws of the State of New York in order to make effective (a) the appointment of Purchaser's Agent, (b) the consent of Purchaser to jurisdiction of the state courts of New York and the federal courts sitting in New York, and (c) any other provisions of this Waiver.
10. Nothing in this Waiver shall affect the right of Sponsor and/or the Board of Managers of the Condominium to serve process in any other manner permitted by law or limit the right of Sponsor and/or the Board of Managers of the Condominium or any of its successors or assigns, to bring proceedings against Purchaser in the courts of any jurisdiction or jurisdictions.
11. The provisions of this Waiver shall survive the closing of title to the Unit to Purchaser for the purpose of any suits, action or proceeding arising, directly or indirectly, out of or relating to the Purchase Agreement and/or the Condominium Declaration and By-Laws or any action to enforce the Purchase Agreement and/or Condominium Declaration and By-Laws.
Dated _ 201_ Purchaser:
Purchaser:
Exhibit "C"
Financial Statements of the Condominium for the year ended November 30, 2015
I I
Liberty Court Condominium
Financial Statements
November 30, 2015
Liberty Court Condominium Table of Contents
November 30, 2015
Independent Auditors' Report
Financial Statements:
Balance Sheets
Statements of Operations
Statements of Members' Equity
Statements of Cash Flows
Notes to Financial Statements
Supplementary Information:
Independent Auditors' Report on Supplementary Information
Actual vs. Budget
Expense Analysis by Percentage
Page No.
1-2
3
4
s
6
7-15
16
17
18
2PeonPiaza StbFioor
Now York. NY 10121
Kleiman & Weinshank, LLP CERTIFIED PUBLIC ACCOUNTANTS
lndependeDt Audlton' Report
To the Board of Managers and Members of Liberty Court Condominium
We have audited the accompanying financial statements of Liberty Court Condominium, which comprise the balance sheets as of November 30, 2015 and 2014, and the related statements of operations, members' equity, and cash flows for the years · then ended, and the related notes to the financial statements.
Management's Responslbllity for the Finandal Statements
The condominium association's management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are :free from material misstatement, whether due to fraud or error.
Auditors' ResponslbJHty
Our responsibility is to express an opinion on these financial statements based on our audit3. We conducted ow- audits in accordance with auditing standards generally accepted in the United States of America. 1bose standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free ftom material misstatement
An audlt Involves perfonning procedures to obtain audit evidence about the amounts and disclosures fn the financial statements. The pro~ selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statement!, whether due to :fraud or error. In making those risk assessments. tho auditor considers intemal control relevant to the preparation and fair presentation of the financial statements in ordm to design audit procedures that arc appropriate in the circumstances, but not for 1he purpose of expressing an opinion on
-l-
the effectiveness of the condominium association's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accO\mting estimates made by the condominium association's management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Liberty Court Condominium as ofNovember 30, 20lS and 2014, and the results of its opentions, changes in members' equity, and cash flows for the years then ended in conformity with accounting principles generally accepted in tho United States of America.
Other Matter
The condominium association has not presented the information about the estimates of future costs of major repairs and replacements that accounting principles generally accepted in the United States of America require to be presented to supplement the basic financial statements. Such informatiollt although not a part of the basic financial statements, is required by the Financial Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. Our opinion on the basic financial statements is not affected by the omission of this supplementary information.
New York, New York February 26, 2016
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Liberty Court Condominium Balance Sheets
November 30, 2015 and 2014
Astlets
Cash and Equivalents ~ Operating and Reserve Due from Unit Owners Less: Allowance for Bad Debts Prepaid PILOT Payments Prepaid Expenses Utility Deposit Interest Receivable - Security Fund (Note 4) Less: Unit Owner Defaults
Total Assets
2015
$ 5,811,874 73,199
(16,457) 591,605 254,561
24,385 (23,316)
$ 6,715,851
UabfHtfes and Memben1 Equity ·
Liabilities Accounts Payable and Accrued Expenses $ 219,324 Major Repairs and Replacements Payable 48,013 PR.OT Abatements Payable 485,721 Common Charges Received in Advance 1291674 Total LlabiUties 882,732
Liberty Court Condominium Statements of Operations
For the Years Ended November 30, 1015 and 2014
2015
In eo me Common Charges $13,398,516 Less: Abatement~ (Note 5) (485,721) Less: Designated for Major Repairs and Replacements (518,824) Commercial Income 46,523 Laundry Income 158,321 Interest Income 22,293 Other Income 109,155 . Total Income 12,730,263
Expensea PILOT Payments 6,949,283 Less: Abatements (Note 5) (485,721) Rent 1,680,250 Civic Facilities Payments 285,097 Payroll and Related Expenses 2,215,788 Electric and Gas 236,221 Heating 321,276 Water and Sewer 323,344 Repairs and Maintenance 310,214 Insurance 464,630 Management Fees 187,500 Professional Fees 40,104 Rent w Superintendenfs Apartment w Net 34,475 Corporation Taxes 9,711 Office and Adminis1ration 22,039 Bad Debt (Recovery) Expense {14,548} Total Expense~ 12.579,663
Ineome from Operatlo111 150,600
Other Items Special Assessments - Major Repairs and Replacements 388,491 Charges Designated for Major Repairs and Replacements 518,824 Major Repairs and Replacements (3011817)
Liberty Court CondomiDJum Statements of Members' _Equity
For the Years Ended November 30, 2015 and 2014
Capital Retained ContributioDJ Earnings
Balance- November 30, 2013 $ 458,161 $ 4,531,072
Net Income 87.788
Balance - November 30, 2014 458,161 4,618,860
Net Income 756t098
Balance- November 30, 2015 $ 458,161 $ 5~741958
See accompanying notes to financial statements. -S-
$
$
Total Members•
Equity
4,989,233
87,788 .
5,077,021
756,098
5,833.119
Liberty Court Condominium Statements of Cash Flows
For the Yean Ended November 30, 2015 and 2014
2015
Cub Flows from Operating Activities: Net Income s 756,098
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
(Increase) Decrease in Duo from Unit Owners 16,055 Increase (Decrease) in Allowance for Bad Debts (14,548) (Increase) Decrease in Other Receivables (Increase) Decrease in Prepaid Expenses (37,384) (Increase) Decrease in Utility Deposit 50,795 (Increase) Decrease in Interest Receivable (618) Increase (Decrease) in Unit Owner Defaults (11,404) Increase (Decrease) in Accounts Payable (128,679) Increase (Decrease) in PILOT Abatements Payable (65,302) Increase (Decrease) in Charges Received in Advance 391191 Total Adjustments (151.894)
Net Cub Provided (Used) by Operating Activities 604~04
Net Increase (Deereue) in Cash and Equivalents 604,204
Cash and Equivalents, Beginning of Year 5).07,670 .
Cub and Equivalents, Eud of Year $ 51811.874
Sec accompanyins notes to financial statements. -6-
2014
$ 87,788
6,501 1.489 9,138
(12,565)
(837) (1,422)
(43,527) (200,008)
22£!78. (218.853)
{131.065)
(131,065)
5,338,735
$ sao71670
Note 1 ~ Organization:
Liberty ·eourt CondomlnJum Notes to Financial Statements
November 30, 2015
The condominiwn association. which commenced operations on November 30, 1987, was organized under Article 9~B of the New York Real Property Law to operate and maintain the common property of Liberty Court Condominium. The condominiUJD. which is located in the Borough of Manhattan, consists of 549 units (547 residential, 1 professional and 1 commercial) of which 165 units are held by the sponsor at· November 30, 2015. Common charges and special assessment applicable to sponsor owned units amounted to approximately 45% of net common charges and special assessment for each of the years ended November 30, 2015 and 2014.
Note 2 ~ Summary of Significant Aceountfng Policies:
The accompanying financial statements were prepared using the accrual method of accounting.
Expenditures which represent improvements to property owned by the condominium association are capitalized, while repairs and maintenance are charged to operations. Property and equipment for which the condominium association does not . have title are not reflected as assets of the condominium BSSOciation.
Unit owners are subject to various chargea and assessments to ftm.d their obligations to Battery Park City Authority ("BPCA") and the operating costs of the condominium association. In addition, the condpminium association may periodically impose special assessments and/or designate a portion common charges to provide funds for major repairs, replacements, and improvements. These charges and assessments are recognized as income by the condominium association when billed.
Due from Unit Owners represents amounts due for charges and assessments. It is the condominium association's policy to retain legal counsel and place liens on the properties of unit owners whose charges and assessments are delinquent.
The condominium association bas determined that thue is doubt as to the collcctabillty of a portion of the amounts due ftom unit owners and, accordingly, an allowance for bad debts of $16,457, and $31,005, has been recorded at November 30, 2015 and 2014, respectively.
For purposes of the statements of cash flows, the condominium association coosldera all highly liquid investments acquired with a maturity of three months or less
~7~
to be cash equivalents.
Liberty Court Condomhlium Notes to Financial Statements
November 30, 2015
The preparation of financial statements in confonnity with accounting principles generally accepted in the United States of America requires the condominium association to make certain estimates and assumptions that may affect tho reported amounts of assets and liabilities and disclosure of contingcm assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
The condominium association has evaluated events and transactions that OCCUlTed through Februmy 26, 2016, which is the date the financial statements were available to be issued, for possible disclosure and recognition in the financial statements.
Note 3 - Lease- Battery Park City Authority:
Leasehold
The sponsor is the tenant under a lease agreement dated October 25, 1984 (modified as of April 3, 1987) with BPCA covering the property on which the condominium is situated. A purchaser of a condominium unit acquires by assignment from the spomor, as tenant tmder the lease, a leasehold interest in a unit and a proportionate undivided leasehold interest in the common elements. The ]ease is subject to the master lease coveting all the property in the Battery Park City area.
The term of the lease expires June 17, 2069, at which time an extension or a new lease will have to be negotiated with BPCA BPCA can refuse to grant an extension or new lease, at which tittle the unit owners would be required to surrender possession of their units to BPCA. .
The lease is a "net lease" which provides that the tenant is to pay all costs and expenses of tho pr~. Additionally, the lease provides for the payment of base rent, supplemental rent, payments in Ueu of real estate taxes ("PU.OT") and civic &cilities payments as follows:
Base Rent
Annual base rent was $1,627,000 for the lease year ended October 31, 2014, with annual Increases of approximately three pe%CC!lt each November 1 through
-8-
Liberty Court Condominium Notes to Financial Statements
November 30, 2015
October 31, 2027, and annual base rent of $3.})19,000 for the lease year ending October 31, 2028, with annual increases of approximately three percent each November 1 through October 31, 2042.
For the lease years commencing November 1, 2042, and November 1, 2057, the annual base rent will be adjusted to equal the greater of 6 percent of 1he fair market value of the land or 10!)0A, of the base rent payable prior to November 1, 2042, and November 1, 2057, respectively. The detennination of fair market value for purposes of fixing the base rent will bo by appraisal, unless at least twelve months before the appraisal date, BPCA and the condominium association agree upon such fair market value.
For the years ended November 30, 2015 and 2014, rent expense totaled $1,680,250 and $1,631,083, respectively.
Payments in Lieu of Taxes C"PILQT"l
For each tax fiscal year of the City of New Yorlc or part thereof during the term of the least\ PILOT is equal to the product of the assessed value of the parcel multiplied by tho tax rate applicable to comparable real property situated in the Borough of Manhattan for such tax year.
For the years ended November 30, 2015 and 2014, PILOT expense (net of abatements -see Note 5) totaled $6,463,562 and $6,323,713, respectively.
' Civic Facilities Payments
The oondominiwn association is obligated to pay BPCA an annual stun, fn equal monthly installments, far Its allocable share (26%) of maintaining, repairing. restoring, replacing and upgrading the residential portion of Rector Park and the Esplanade. Such payments may not exceed 125% of the civic facilities payment! for the prior year.
For the years ended November 30, 2015 and 2014, civic facilities payments totaled $285,097 and $274,132, respectively.
Note 4 • Security Fund:
Pursuant to the BPCA ground lease, the sponsor was required to deposit a letter of credit in the amount of $1,680,000 with BPCA prior to the initial unit transfer to
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Liberty Court Coadomlnium Notes to Financial Statements
November 30, 2015
secure the obligations of each unit owner under the lease. The amotmt on deposit was permitted to be reduced upon the sale of a certain numbct of units, but not to less than $560,000. 'In November 1988, the sponsor paid to BPCA the amount of $756,000 (principal) based upon the sale of 600.4 of the units at that time to replace the letter of credit. In order for the security fund to be reduced to $560,000, the sponsor would have had to sell 15% of the units. In May 2013, even though the sponsor had only sold approximately 70% of the units, BPCA agreed to return $196,000 to the sponsor, and reduce the security fund to $560,000 (principal).
Commencing on the tenth anniversary (December 21, 1997) of the date of the initial unit transfer and on each succeeding anniversary of such date, the amount by which the securi~ fund mc:cceds the principal is required to be disbursed to the condominium association. Pursuant to the lease, a portion of unit owner defaults on assessments for common charges may be applied as a reduction of payments due BPCA under the lease. The amOtmt of the reduction may be paid to BPCA from the security fund at BPCA's option. ·
On the expiration date of the lease, the balance of the security fund held by BPCA under the lease shall be disbursed to the Board of Managers, along with all interest and income earned thereon, and such amount shall be distributed to the then unit owners in proportion to their common interests, provided, however, that in the event the condominium is continued under an extension of the lease or a new lease, such amount shall be retained by the condominium association and used for such purpose or purposes as may be approved by a vote of75% of the then unit owners.
Note 5- Real Estate Tax Abatement Proeram:
Under the various real estate ·tax. abatement programs, certain condominium unit owners are eligible for a partial abatement of PU..OT. For the years ended November 30, 2015 and 2014, the condominium association \vas granted abatements of PILOT on behalf of eligible unit owners, totaling $485,721 (for the period July 1, 2014 to June 30, 2015, and $422,230 (for 1he period July 1, 2013 to Juno 30, 2014, net of various adjustments for the period July 1, 2011 to June .30, 2013), respectively.
Note 6 • Multlemployer Union Pentlon Plan:
The condominium association contributes to a multiemployer defined benefit pension plan under the terms of a collective bargaming agreement that coven its union-
Liberty Court Condominium Notes to Financial Statements
November 30, 2015
represented employees. The risks of participating in a multiemployer plan differ from those of a single-employer plan in the following respects: (a) assets contributed to the multiemployer plan by one employer may be used to provide benefits to employees of other participating employers; (b) if a participating employer stops contributing to the plan, the unfunded obligations of the plan may be borne by 1he remaining participating employers; and (c) if the condominium association chooses to stop participating in the multiemployer plan, it may be required to pay the plan an amount based on the unfunded status of the plan, which is referred to as the withdrawal liability.
For the years ended November 30, 2015 and 2014, the condominiwn association's participation in the multiemployer plan is outlined below:
Legal Name: Building Service 32BJ Pension Fund ("Plan") Employer Identification Number: 13-1879376 Plan Number: 001 Collective Bargaining Agreement Expiration Date: April20, 2018 Pension Protection Act Zone Status:
Year Beginning July 1, 2015 - Red (less than 65% funded) Year Beginning July 1, 2014 - Red (less than 65% funded)
Funding Improvement Plan/Rehabilitation Plan Status: Implemented Surcharges Paid to Plan: None Condominiton Association's Contributions:
YearEndedNovember-30, 2015 $ 129,456 Year Ended November 30, 2014 $ 130,499
Minimum Rcqu1red Pension Contr1butions (per week/per employee): YearEndedDecember31,2013 $ 90.75 YearEndedDecember31, 2014 $ 94.75 Year Ended December 31, 2015 $ 98.75 Year Ended December 31,2016 $102.75 YearEndedDecembcr31,2017 $106.75 Period January 1, 2018 to April20, 2018 $ 110.75
The information provided above is from the Plan's most current annual report for the year ended Iune 30, 2015. The Pension Protection Act Zone Status is the most recent zone s1atus available, was provided to the condominium association by the Plan, and is certified by the Plan's actuary. The condominium association's contributions to the Plan are less than S% of all employers' contributions to the Plan, and there have been no significant changes that would affect the comparability of the contributions for the years ended November 30, 2015 and 2014. In addition, under the Collective Bargainill8 Agreement (• .Agrmneot"), certain retired employees arc eligible for health
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Liberty Court Condominium Notes to Financial Statements
November 30, 2015
benefits as defined in the Agreement.
Note 7- Rent- Superintendent's Apartment:
The condominium association has entered into a lease for the rental of an apartment in an adjoining property, for residency by the condominium's superintendent. The lease, which expires November 30, 2017, requires an annual rent of approximately $88,000. In addition, the condominium association has entered into a lease for the rental of the unit formally occupied by the condominium's superintendent. The lease, whic~ expires June 30, 2016, provides for 1he condominium association to receive annual rent of approximately $51,000.
Note 8 - Corporation Tuea:
If certain requirements are met, a condominium association may elect to be taxed either as a homeowners association or as a regular corporation. For each of the years ended November 30,2015 and 2014, the condominh.un association elected to be taxed as a homeowners association and paid tax only on its nonexempt function income as defined in Section 528 of the Internal Revenue Code.
In addition to income taxes, New York State ("NYS") and New York: City ("NYC") have alternative tax bases. Corporation Taxes reflected in the Statements of Operations represent NYS and NYC tax on the capital of the corporation, adjusted to market value.
As of November 30, 2015, the corporation's tax returns for the years ending November 30, 2012 through 2015, remain subject to examination by taxing authorities. There arc currently no tax examinations in progress. ·
Note 9 - Related Party Transactions:
The condominium association was obligated mder a lease agreemeat with the sponsor whereby the sponsor leased the forty-fifth and forty-six floors of the building to operate a health club. The initial term of the health club lease was for a period of teo years commencing May 1, 1988, with a provision for six renewal terms of five years each. Under the terms of the lease, the sponsor paid an initial annual rent of $25,000. The lease provided for an inaease during each renewal term of half of any percentage
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Liberty Court Condominium Notes to Financial Statements
November 30, .2015
increase in the Consumer Price Index ("CPI") existing during the first month of said renewal term over the CPI existing on July I, 1987. Effective December 1, 1998, the sponsor and 1he condominium association entered into a "Standstill Agreement", whereby both parties agreed that no rent would be paid while the Board of Man.agas explored various (>ptic)AA Effective March 24, 2008, the condominium association gave tbhty days' notice to the sponsor that the health club space was no longer on a "Standstill Agreement" and the lease was terminated. However, by mutual agreement, the sponsor maintained the condominium association's health club space with no rent per month, which was terminated May 31, 2015, and the sponsor vacated the club pl'e~Jllses. In July 2015, 1he condominium association entered into a contract for the refurbislunent of the health club totaling approximately $1,000,000 plus other costs in connection with the project. Through November 30, 2015, costs of approximately $140,000 have been incurred on this contract, leaving approximately $860,000 to be incurred in a subsequent period.
In addition, the condominium association leases the parking garage to the sponsor. The initial term of the garage lease was for a pedod often years commencing Aprill, 1988 with a provision for six renewal tenns offive years each. Under the tenns of the lease, the sponsor paid an initial annual rent of $12,000. The sponsor opted to renew the lease for the fourth extension period of five years, which commenced April!, 2013. The lease provides for a rent increase at the commencement of each renewal term using the same formula as provided in the health club lease. For each of the years ended November 30, 2015 and 2014, rental income Wlder this lease totaled approximately $19,500.
The condominium association receives management and maintenance services from entities controlled by the principals of the sponsor. For the years ended November 30, 2015 and 2014, the management agreement provided for management fees of $187,500 and$183,797, respectively.
Note 10 ~Future Major Repaln and Replacements:
The condominium association has conducted, but not presented a study of the remaining useful Uves of tho componems of common property and current estimotes of costs of nuijor repairs and replaccmcnts that may be required in the futuro. When replacement funds are needed to meet future needs for major repairs and replacements, the condomJnium association bas the right to utillze accmnulated reserves and available cash, increase common charges, impose special assessments, borrow, delay repairs and rcp.lacanents until the ftmds arc available, or any combination of the above.
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Liberty Court Condom.Jnium Notes to Financial Statements
November 30, 2015
For the years ended November 30,2015 and 2014, the condominium association designated common chalges of$518,824 and $513,600, respectively, for future iruVor repairs and replacements, which was necessary to comply with Federal National Mortgage Association guidelines for underwriters to consider mortgages for the . condominium association's unit owners. These amounts are equal to, or have exceeded, the recommended annual contributions as per the reserve study. In addition, the condominium association has imposed special assessments (see Note 12) and intends to make future IIIlllual contributions in accordance with 1he recommendations of the reserve study.
Note 11 - Conceatration of Credit Risk:
The condominium association maintains cash balances at institutions insured by the Federal Deposit Insurance Corporation ("FDIC") and the Securities Investor Protection Corporation ("SlPC"). The insurance provided by SIPC is for losses caused by the fiillure of the financial institution, not against losses caused by changes in the marlcet value of investments held by the financial institution. At November 30, 2015, uninsured balances totaled approximately $2,050,000. The condominium association has not experienced any losses in such accounts and believes it is not exposed to any significant risk or loss.
Note 12 -Unit Ownen Information:
The condominium association has imposed special assessments to fund major repairs and replacements, of which approximately $388,000 was billed in April 2015, and approxilitately $198,000 was billed in June 2014.
Special assessments and the portion of common charges designated for major repairs and replacements can increase a unit owner's cost basis in their condominium unit. Each tmit owners' increase is equal to their common area percentage of the following amounts, for tho years ended November 30:
Liberty Court Condominium Notes to Financial Statements
November 30, 2015
At each closing of title, each purchaser of a residential condominium unit is required to make a contribution of $500 to the working capital fund. The sponsor is not required to make this contribution in connection with its retention of any unsold units. These amounts are recognized as income for financial statement purposes.
