Managing the unmanageable Co-Op City, the Scott way.

With high vacancy rates, a crumbling infrastructure and batting board members, Co-op City faced many of the same problems as other government-assisted housing developments Marion Scott Real Estate Inc. has managed.

"Co-op City was in a time warp," said company founder Marion Scott. "Nothing had changed in the 30 years since it opened."

So in October 1999 -- after Marion Scott became the first outside firm in Co-op City's history to serve as property managers -- company representatives rolled up their sleeves and got to work. To executive general manager Kenneth Silverman, who said he spends each day from "dawn to dusk" at the 15,372-unit complex, fixing the myriad problems was a matter of getting back to real estate basics.

"We put in a program we call triage," said Herb Freedman, secretary and general counsel.

The formula for turning around "troubling" properties -- Marion Scott's specialty -- is a simple matter of increasing revenues and decreasing expenses. Accomplishing those goals, however, is far from simple. Marion Scott analyzed every aspect of Coop City's property management, from public safety to garbage removal.

Marion Scott embarked on a marketing campaign with the title "RiverBay at Co-op City" to reflect the family lifestyle and upwardly mobile appeal of the complex.

With 35 residential towers , seven schools and three retail centers on more than 300 acres in the Bronx, Co-op was built in 1968 under the state's Mitchell-Lama program. With residents who have lived there for years, Marion Scott sometimes faced cultural resistance towards change.

"It was Real Estate 101," Silverman said. "When I came here the first question I asked is 'Why is the garbage piled up in front of the buildings?'"

The state's Division of Housing and Community Renewal, which oversees all Mitchell-Lama projects in the state, approved Marion Scott's initial one-year, $1.45 million contract. The state viewed the hiring of a professional management team in a positive light, saying it will be beneficial in helping Co-op City become fiscally sound.

This is not the first time, Marion Scott principals have been involved with Co-op City. From 1975 to 1978, Scott was a special consultant to Gov. Hugh L. Carey and with worked with RiverBay to stabilize the project. Freedman represented Co-op City residents during their 1975 rent strike and was the group's lawyer for four years.

It is hard to argue with the results Marion Scott has seen in the 15 months since assuming the property management role. The vacancy rate has dropped to near zero, with only 30 unassigned units left in the complex. When Marion Scott was hired there were just over 400 unassigned units and, four years ago, there were about 1,500, Scott said.

Among cost savings detailed in a one-year progress report issued by Marion Scott in Oct. 2000 were $1.2 million in elimination of unneeded staff being billed to RiverBay, $750,000 in elimination of unnecessary asbestos abatement, $125,000 from the use of a professional drain cleaning company in place of four full-time porters, and $500,000 from collection of back billings from the Board of Education.

"There were good people here, they just needed direction," Scott said.

As one of the largest managers of government-assisted housing in the New York Metropolitan area, Marion Scott manages almost 30,000 apartments. The company, formed in 1990, has completed over $35 million in construction to date, more than half of which was funded by government grants. Another $17 million is underway.

Other Marion Scott projects include Rochdale Village, a 5,860-unit government financed cooperative in Jamaica, Queens; Earl W. Jimerson Co., a 422-unit Mitchell-Lama cooperative in Brooklyn; and 1199 Housing Corp., a 1,594-unit Mitchell-Lama cooperative in Manhattan.

When Marion Scott was retained as property managers for Rochdale Village, it was on the brink of financial disaster. The development was behind on payments on a $52 million mortgage to the Housing Finance Agency and, like Co-op City, was badly in need of infrastructure repairs.

Today, the loan is being repaid and repairs have been completed.

"Rochdale Village is a microcosm of Co-op Village," Scott said. "When we came, there was a semi-moribund reconstruction program and a board that was battling and couldn't decide on anything."

For its work on Lexington Gardens, a 108-unit Section 8 assisted housing development in East Harlem, Marion Scott was featured in the city's Housing Development Corporation 1997 annual report. During an annual inspection in 1995, HDC found that the development had fallen into disrepair and had become a haven for illegal drug use and distribution, the report states.

Using a variety of "carrot and stick" methods, HDC convinced the limited partners of the property to replace the managing general partner with a "responsible entity, Marion Scott."

"By the end of 1997, the property was repaired and passed housing inspections. The threat of a mortgage default costing the federal mortgage insurance program more than $7 million had been averted," the report states. "In the future saving the portfolio of Section 8-assisted, federally-insured housing is going to be a monumental undertaking, particularly as Congress and (the federal Department of Housing and Urban Development) attempt to reduce subsidy outlays. HUD's efforts at Lexington Gardens will help to provide a model for future affordable housing restructuring."