Posted by Leonard Steinberg on August 21st, 2014

I sit on the Board of my building, and sometimes (very seldom) a building can come into a windfall of money, a surprise revenue source that boosts its reserves unexpectedly and outside all budgetary expectations. New York State is experiencing this exact phenomena right now:  It will realize a larger-than-previously-expected cash windfall of more than $5 billion in 2014 from settlements and fines squeezed from banks by regulators. The total includes the $4.4 billion in bank settlements already signed, plus more than $600 million coming from the mortgage-related settlement with Bank of America that could be signed today. The largest part comes from a $3 billion settlement with BNP Paribas, fined to end a money-laundering probe. Earlier this month it was estimated the Wall Street windfall at $4.2 billion — but that didn’t include the expected BofA settlement with the Justice Department, the largest-ever settlement between a bank and Washington, possibly more than the $613 million.

The Wall Street settlements and fines are about 18x the budgeted $275 million leaving New York with the largest budget surplus ever, according to Morris Peters with the state budget office: now comes the question, what to do with this money? It is always tempting for governments (and buildings) to SPEND that money on STUFF. Most times it is wasted, and at the end of the day there is very little to show for it. It is critical that this New York State windfall is used for the purpose it was intended: to benefit the people whose lives were impacted by the bad behavior. So this money should not be wasted on useless ‘projects’, ongoing budgetary needs or the like. It should be used for MONUMENTAL items, things that could actually have a permanent positive impact on the lives of the citizens of this state. So what could the State spend this money on? Infrastructure improvements? Better public transportation? A Solar farm to power Manhattan? Protection mechanisms for future storms and global warming related issues?

Building budgetary windfalls should be used for the same purpose: applying these funds to things that actually boost the value and well being of the entire building. A new gym? A bike room? Hallways that compete with brand new buildings? New windows? Solar panels on the roof to generate electricity and offset building costs for the future? Pay down debt? Buy out an apartment for a live-in Super? Renovate the street level so the first impression of the building is improved? Replace all light bulbs in the building with energy efficient ones and replace all stairwell lights with sensor lights that only come on once they detect movement? Band-aids that disguise mis-managed budgets are a disgrace and need to be avoided. Lets not forget most lottery winners go bankrupt.