Sprinklers: we get hosed again!

Real Estate Weekly, April 7, 1999 by Thomas F. Campenni

Mayor Giuliani has signed the new sprinkler bill into law. While you will not have to install a sprinkler system for existing units, there will be new signs needed which will be attached on all apartment doors and other reporting requirements.

Sprinklers will no doubt save lives, so the requirement that they be in new construction should be applauded. But politicians still think they know what is best for the housing market.

New construction is free of rent regulation. Therefore the costs of installing sprinklers or any other item can be easily passed along to the consumer, also known as the tenant. In fact, in the wake of those two tragic fires earlier this year, many developers are already putting in fire prevention systems because of consumer demand. No laws are needed because that particular amenity is wanted by the market.

Unfortunately, with the bulk of New York's rental housing, the concept of the market is a foreign idea. What would be the point of improving our stock, since the freedom to charge based on market conditions for our product is not allowed? Installing or making any improvement is at best rewarded by an increase that is below the cost of the funds being spent. What person in their right mind spends more money on an investment than it returns.?

This is the real state of the city's rental housing market. The buildings that are developed by Donald Trump and his fellow developers are to be applauded and admired. But they are in a completely different league than the rest of us. When was the last time you were in a trendy nightspot such as Veruka with DeNiro or DiCaprio instead of a diner on Astoria Boulevard with Spiro?

What the politicians don't seem to understand is that we are the same people who occupy our buildings, just in a different business than the tenants. Because we happen to have a property or two, we are transformed from middle class to millionaires. To the city fathers, we are oppressors of the worse kind - Snidely whiplashes who would tie Little Nel to the tracks without political intervention.

The headline in the New York Post calls the sprinkler law a first step only. As in all governmental intrusions, this will not be the end, but only the beginning in the degree that the City will spend your money, control how much you can charge your tenants and mandate how you mn your business. It is an old story with just new plot lines - a sitcom as predictable as any on television with stock characters: villains and protagonists.

One of the requirements of the bill will be for you to install diagrams of the exits on the back of all apartment entrance doors. These will be similar to those same wonderful signs now affixed to hotel doors. Can you see what fights will be caused when tenants refuse to have you hang that attractive work of art on the door? I am sure that there will be entire reams of paper devoted to the writing of the rules for the requirements to attach those diagrams to the back of doors, along with how many times and just in what manner you have to notify the tenant of the requirement to attach the sign.

There will also be something similar to the yearly window guard notice to be sent to each tenant. Laws on top of laws on top of laws, all in the name of protecting the public from you. It is fascinating to watch the bureaucratic mind at work. There is no room for creativity, only the exclusivity of the "one true way" - the one way that is promulgated in the regulations - regulations that will only be interpreted to the benefit of the poor tenant.

Why must New York politicians insist that this continue? The rest of the world has seen the light and consigned socialism and the vast amount of laws and regulations needed in enforcing it to the history books. Capitalism, with all it's quirks and craziness. has triumphed everywhere but in the field of New York housing. The only reason it hasn't won here is because of the lack of political will to even try.

The Mayor and the City Council pander to tenants to the detriment of the health of New York. Fundamentally, the government has taken the position that a healthy and vibrant rental housing market is to be subrogated to the unrealistic fears of tenants. Everywhere that controls on rents have been eliminated, these unrealistic fears have not materialized. The market compensated and provided for all.

New York's politicians have done with housing what they did with school infrastructure and other quality of life issues. Spending money to keep those things in good shape was not done. Instead, vast sums of money were spent providing for bread and circuses to keep the politicians in office. Now we see how important those things are. Perhaps someday we will also get smart about housing.