To: Riveredge Board of Directors From: Peter Merson - Apt 8T Date: July 8, 2016 Re: Landscaping Budgets vs Audited Actual Expenses

If , “A good amount of attention has been given to the landscaping of the property…”, as you stated in your latest ANNUAL REPORT, it appears you gave NO ATTENTION to the landscaping budgets you are required to provide shareholders annually - Article II Section 6 of the cooperatives By-Laws.

I would like someone to explain to me how it is possible for a Board of Directors to provide shareholders, landscaping budget’s, which do not in any way come close to reflecting reality, and then, not even mentioning a word about it.

You should recall in June 2015 – pages 10/11 – I had requested new procedures (or people) be put in place for a more intelligent budgeting process.

I and many others can hardly wait to see what is going to be spent on landscaping in 2016.

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Landscaping Budgets vs Actual ExpensesYour Audited

Year Budget Actual Variance2014 12,000$ 38,007$ 26,007$ 2015 12,000$ 56,065$ 44,065$

24,000$ 94,072$ 70,072$

2016 12,000$ -$ -$

-------------------------------------------------------------------------------------------------------------- RIVEREDGE OWNERS, INC.

ANNUAL REPORT 2015-2016

2. BUILDING/PROPERTY MAINTENANCE

“A good amount of attention has been given to the landscaping of the property this past year. Our gardening company has revitalized the entrance drive to the property. This Spring’s spectacular display of daffodils was the result of their planting hundreds of bulbs last Fall. We look forward to further work on the landscaping of the property this coming year.” --------------------------------------------------------------------------------------------------------------

CC: John Ricci – Westchester Property Management Group, Inc.

RIVEREDGE OWNERS, INC.

ANNUAL REPORT

2015 - 2016

The Board of Directors primary focus this year has been on upgrading the building's heating system and modernizing the building's elevators. The following is a summary of the Board's activities over the past year.

1. BOARD PLANNING AND FINANCES

In its ongoing effort to maintain the Riveredge property, this year the Board of Directors focused on two major projects. First, the building's boilers and heating system were updated. Concurrently, the process ofrenovating the building's two elevators got underway.

The Board's on-going objective is to ensure that the cooperative remains financially sound, while maintaining and keeping its operating systems up to date. The Board remains committed to properly funding our reserve fund in order to not only have adequate funds available in case of an emergency, but also to finance capital projects, such as the heating system upgrade and elevator modernization, without the necessity of an assessment or increase in maintenance.

The cooperative's budget and reserve fund are in excellent shape. The Board has successfully accomplished their financial goals by diligently monitoring operating costs and expenses. The updating of our heating system promlses to reduce the amount of fuel we use. That and the decrease in fuel oil prices this heating season had a positive impact on our budget. However, increases in real estate taxes and other operating expenses have cut into that savings. Looking forward, the Board will again review the cooperative's budget in July, when increases in real estate taxes and trends in fuel oil and other operating expenses are known. Still, we do not anticipate a maintenance increase again this year.

2. BUILDING/PROPERTY MAINTENANCE

We completed the upgrading of our boilers and heating system this year. Energy efficient burner units were installed on the boilers. A new digital controller was installed to regulate the heating system. The new controller regulates the consistent flow of hot water into the heating system (rather than the previous system of turning the boilers completely off and on again). This affords a more constant heat, saves fuel and cuts down on wear and tear on the heating system.

We are now in the middle of our elevator modernization project. The project includes a major overhaul of the working systems of both elevators, including new elevator motors, replacement

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of the door opening mechanisms and the installation of new controllers. The interiors of the elevator cabs are also being updated.

The Board selected Vertical Elevator Co. Inc. for this project. The south elevator is just about finished and ready to be put back into service. The north elevator will then be shut down for its overhaul. That should take approximately eight to ten weeks. The availability of only one elevator during this project has created some inconvenience, particularly when accommodating move,.ins and move-outs, but, so far, it has been kept to a minimum and we are that much closer to convenient and reliable elevator service.

The B-1 storage room had been used as a staging and work area by the elevator company during our elevator project. In the meantime, a storage committee has studied the various possible uses of the storage room and will advise the Board on the best use of the room when it again becomes available for storage.

A good amount of attention has been given to the landscaping of the property this past year. Our gardening company has revitalized the entrance drive to the property. This Spring's spectacular display of daffodils was the result of their planting hundreds of bulbs last Fall. We look forward to further work on the landscaping of the property this coming year.

The outdoor pool has been operated by Pool Management Inc. for the last few years and they have done a good job. We have contracted with them to continue to operate the pool again this summer. The indoor pool was left open during the summer months last year and the Board intends to keep the indoor pool open again this summer.

3. WEBSITE

Last year, the Riveredge partnered with Building Link to improve the riveredgeowners.com website and create a more comprehensive and easier to use website. Our website now allows residents to place work request orders for needed repairs, communicate with the managing agent, and the Board and to access information on their apartment, among other features. Our quarterly newsletter, The Riveredge Currents, is now published and available on the website.

4. PERSONNEL

Alex Sanchez is in his eighth year as superintendent and we continue to appreciate his dedication and skills. His carpentry and plumbing skills have saved the building a lot of expense and we want to thank him.

Our porters, Brian Dunne and George Gonzalez continue to do a good job for the Building. We appreciate both of their efforts on behalf of everyone at the Riveredge.

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5. SALES/SUBLETTING

Four apartments were sold during the last year. A one-bedroom unit on the woods side sold for $157,000 and a one-bedroom unit on the river side sold for $205,000. The number of sublet apartments has increased slightly over the last year. There are presently twenty sublet apartments in the Building.

The Board of Directors meets twice a month to stay abreast of our on-going projects, as well as the day-to-day issues at the Riveredge. We encourage residents with any ideas or concerns to make us aware of them so that we can better serve the Riveredge.

RIVEREDGE OWNERS, INC.

BOARD OF DIRECTORS

Glenn Keegan, President Janet Henry, Secretary Les Lew, Treasurer Karen Gongora Michael Hertz Jasbir Nami Kaur Deven Sharma

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RIVEREDGE OWNERS, INC.

DETAIL OF EXPENSES

FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014

2015 2014

PAYROLL AND RELATED: Salaries and bonuses $ 140,194 $ 130,912 Payroll taxes 10,954 11,467 Employee benefits 54,457 44,975

$ 205,605 $ 187,354

UTILITIES: Electricity and gas $ 50,136 $ 54,842 Fuel oil 149,523 282,575

$ 199,659 $ 337,417

REPAIRS AND MAINTENANCE: $ 2,929 $ 3,170

17,102 13,446 22,395 18,690 22,455 33,700 24,308 31,577 1,

30,699 33,417 '56 065 38 007 52,724 56,237 85,787 48,300

339 6,488 1,485 1,157

Exterminator Elevator Miscellaneous repairs and general contracting Janitorial supplies Plumbing, heating and boiler Pool expense including supplies Landscaping Security Water damage repairs, net of insurance reimbursement Windows and glass Intercom Laundry room Garage door Consulting fees 1 640

$ 316,104 $ 286,013 CORPORATE TAXES AND MISCELLANEOUS:

Stationery, printing and postage $ 3,725 $ 12,789 Telephone 8,302 7,934, Corporate taxes 6,928 6,462 Licenses and fees 1,364 1 2·14

$ 20,319 $ 28,399

-13-. . . .

Audited Annual Financial Statement

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This is from the Board of Directors

What is it telling me ? Peter Merson Apt 8T

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MAINTENANCE LAUNDRY INCOME LATE CHARGES PARKING/GARAGE INCOME INTEREST INCOME STORAGE INCOME VENDOR INCOME MISCELLANEOUS INCOME

TOTAL INCOME

MORTGAGE INTEREST ONLY MORTGAGE PRINCIPAL REAL ESTATE TAXES STAR REBATES CORP TAXES INSURANCE MANAGEMENT FEES LEGAL FEES-NON REIMBURSED ACCOUNTANT OFFICE EXPENSES 1098/STAR PREP ADMIN TELEPHONE/CABLE FUEL OIL BOILER REPAIRS PLUMBING REPAIRS WATER AND SEWER CON EDISON GAS AND ELECTR SUPPLIES PAYROLL TAXES PAYROLL GROSS LANDSCAPING EXPENSES EXTERMINATOR EXPENSES MISC. REPAIRS AND MAINTEN ELEVATOR EXPENSES POOL SERVICES ELECTRICAL REPAIRS

RIVEREDGE OWNERS, INC.

INCOME STATEMENT 2014 BUDGET

2014 BUDGET

INCOME

$ 1,620,000 32,500 1,500 88,000 5,000 2,000 800

2,000

1,751,800

EXPENSES

144,000 40,000

212,000 136,000 5,000 54,000 41,800 1,000 7,000 10,000 1,000 5,000

220,000 6,000 4,000 40,000 70,000 27,000 10,000 127,000 12,000 2,000 20,000 12,000 30,000 4,000

This is from the Board of Directors

What is it telling me ?

Peter Merson Apt 8T

Maintenance is WRONG - BASED UPON $19.05 PER SHARE SHOULD BE $17.85 PER SHARE

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SECURITY/INTERCOM/ALARM EMPLOYEE BENEFITS PERMITS HOLIDAY BONUSES GARAGE REPAIRS LOCKSMITH BANK CHARGES WINDOW REPAIR/REPLACEMENT MISC. GUARD SERVICE SEWER DRAINAGE LAUNDRY REPAIRS FIRE EXT/SPRINKLER RESERVE-CAP. PROJECTS

TOTAL EXPENSES

RIVEREDGE OWNERS, INC.

INCOME STATEMENT 2014 BUDGET

2014 BUDGET $ 12,000

50,000 1,000 3,500 1,000 1,000 100

1,000 2,000 48,000 1,000 5,000 500

384,900

1,751,800

----------------------------

THIS IS $4.53 PER SHARE FOR THE YEAR, 22% OF THE BUDGET AND FOR WHAT ? WHERE IS THE CAPITAL EXPENDITURE PLAN ?

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To: John Ricci - Westchester Property Management Group, Inc.From: Peter Merson - Riveredge Cooperative Yonkers NY 10701 Date: June 15, 2015 RE: Riveredge Co-op Budgeting Process

In December 2014 I sent you a memo inquiring about the huge variances in the 2013 co-op budget and have yet to receive a response. (6 months ago)

I was somewhat surprised since the following statements had been made about you and/or your company

“They bring to Riveredge a more sophisticated, professional, responsive and congenial management style that is more in keeping with our vision for Riveredge.” Ms. Karen Gongora May 2011 – Riveredge Board of Directors

“He has vast experience and shall work with the Board of Directors and Shareholders to make sure that Riveredge Owners, Inc. is a well-managed property.” Mr. John T. Lamorte Dec 14, 2010 – President Westchester Property Mngt

I would like to press the restart button and begin again.

My issue is, the annual budgeting process at the co-op, which I would consider the most important function of a Board of Directors, does not work for shareholders.

A proper budgeting process involves: 1. Preparing and presenting something which someone can comprehend2. Including a cover page with explanations as to the decisions made3. Making sure all shareholders receive a copy per the co-op rules4. Comparing the annual budget to the Audited Annual Financial Reports5. Explaining any significant variances to shareholders6. Inclusion of a 3-5 year capital expenditure budget

Since none of these processes are currently followed, I am requesting: 1. new procedures (or people) be put place so that they are2. an explanation be provided to all shareholders detailing the need for

$216,000 or $2.54 per share or 13% of the 2015 budget for Reserves orCapital Expenditures. Make sure it is intelligent and based upon facts.

I hope you take my request more seriously this time.

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I would like to see you, your company and the Board of Directors live up to the hype presented to shareholders when you became the Managing Agent of the co-op in January 2011 at additional cost of $10,000 a year.

Additionally, reading about a situation like this from another source is generally not helpful.

If you wish to contact me, send an email.

Sincerely,

Peter Merson 1 David Lane Apt 8T Yonkers, NY 10701

petermerson@hotmail.com

Attached: Timeline and Tenure 2013/2014/2015 Actual co-op budgets from the Board of Directors 2013/2014/2015 My interpreted co-op budgets & year-end comparisons

CC: Riveredge Board of Directors – board@riveredgeowners.com John T. Lamorte - jlamorte@wpmginc.com Nancy Margeson - jricci@wpmginc.com

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