21-Dec-20 – A Gold Coast battle of residents and unit owners versus the Newberry Plaza Board of Directors broke out in October and now may have spiraled deeper into acrimony and distrust, just in time for the holidays.

The residents, who call themselves the Newberry Plaza Community Coalition, oppose a pending deal to transfer part of the building to an outside interest, and now are asking if the action is part of a bigger plan.

In a November 23 memo circulated by residents, they ask if the project is “the beginning of a longer-term plan by developers and investors, and...is potentially the beginning of a deconversion of this building, to change it to a completely commercial/rental building.”

Condo deconversions, where residents vote to sell their units in bulk to an investor, have become a trend with condo buildings, particularly those considered “distressed” and in need of extensive and expensive upgrades or repairs. Once a set threshold in support of the deconversion sale is met, all owners would be forced to sell their units, even those forced out against their will.

But is the 52-story Newberry Plaza considered a “distressed” building? The NPCC says it is. They point to low association cash reserves and warn of a future loan to do “cosmetic projects that make the building look more commercial.”

The NPCC also points to “massive repairs coming,” according to a study done three years ago, estimated to include $14 million of infrastructure work over the following ten years. Any property transfer would also create large transfer taxes, and the memo states that the association has not “raised assessments in ten years, as our board so proudly proclaims – this is simply bad business if you want to continue owning a property.”

Project would increase commercial space, decrease residential space

Board president Christian Pezzuto has been working for two years with 11 East Partners and Gensler Design to put together a redevelopment project that would increase commercial space mostly along the State Street side of the building, by decreasing Newberry Plaza residential common element space and diminishing the very plaza the building was named after.

A proxy ballot was sent to members of the Newberry Plaza Condominium Association earlier this year, asking for the right to appoint Pezzuto (left) as the association proxy, “with full power of substitution, for and on behalf and in the name, place, and stead of the undersigned, to attend any meeting of the unit owners, held on or before March 31, 2021, and vote all of the interest of the association.”

Pezzuto would in effect be authorized to take all needed actions to execute and implement any redevelopment plans if the Newberry Plaza condo board wins the vote. But NPCC says the board has now “refused to answer questions related to the vote and [they] refuse to allow review of the proxy votes.”

The NPCC memo references a November 11 virtual board meeting where Pezzuto allegedly said that the opposition’s claims about the board’s “unwillingness to verify” an October 11 vote, or provide a vote verification, is not true.

“The proxy vote can be verified after the vote is completed,” he said, according to the NPCC memo. That is, the residents won’t know the status of the proxy vote count until the vote is declared over.

NPCC claims that the board did not address any of the other items they presented at the November 11 meeting, and did not allow any comments or questions.

“Everyone attending was put on mute. The notification for the meeting was sent out the same day and did not allow for submitting questions to be addressed by the board,” says the NPCC.

NPCC says that based on original working drawings of the building, resident owners are losing 10,145 square feet of real estate, and their condo association will receive no cash payment for the property transfer. The coalition says at $1,000 per square foot, over $10 million in real estate value is being taken from them.

A document attached to the memo shows parts of the building lobby and an “eastward expansion,” with square footage they believe is being given to 11 East Partners. The document shows three affected areas: 1,701 square feet in the building’s atrium, which could be converted to three stories equaling 5,132 square feet; their south lobby with 1,196 square feet; and the eastward expansion with 1,272 square feet, multiplied by three stories, equaling 3,817 square feet.

(Above) Proposed design (left) that would add three floors of commercial space to the east side of Newberry Plaza. Current design at right.

The residents who are part of NPCC have been demanding answers about the deal for most of 2020. They want to know why the plan is being advanced and who benefits from the deal. The short answer, they say, is 11 East Partners, who will control the space if the deal closes.

NPCC members say they’re getting stonewalled

“If the board, Sudler [Property Management], and 11 East Partners wanted to work collaboratively with owners on a deal and design that helps both the commercial and resident owners of the building, that would be wonderful,” they say in their memo. “Until they do, we will be working to stop this deal and project.”

NPCC is demanding the board provide information to them that they say is required by law, including the lease document, proposed layouts and square footage exchanges, and an independent verification of the proxy vote.

The board’s apparent opacity has now created distrust and a campaign to get residents to reverse their proxy votes. The memo asks residents to “submit a new vote to the office and keep a copy of your vote and your communications. If you already voted ‘yes’, submit another proxy vote changing it to ‘no.’”

They are also seeking opinions from building management about whether they think the proposed project would increase or decrease the value of the building. NPCC thinks the actions will diminish the building’s residential value.

“This [plan] is designed to do this specifically,” they say.

NPCC says the design reduces value from a residential perspective. “The fact we are losing our driveway, making accessibility more difficult, and losing direct access to the garage without going outside – those actions will diminish the residential value of this building.”