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June 10, 2010

Sprinklers for 'gut rehabs'?

The legislation that would require fire sprinklers in new and renovated homes in Baltimore is undergoing some renovation of its own.

City Councilwoman Mary Pat Clarke said after a Tuesday committee hearing that she's looking to change the threshold so sprinklers aren't required unless the rehab in question is a "gut" project. "Really a major rehab -- removal of interior walls, etc.," she said.

Under the original proposal, the sprinkler mandate kicked in for any renovation affecting at least 30 percent of the gross floor area or adding 30 percent more space. But there was a hue and cry against adding thousands of dollars to the cost of fairly minor projects such as -- say -- reflooring.

Baltimore's housing agency, which opposed the bill as originally written, estimates the expense of installing a system in an existing home at $13,000 to $15,000. 

Clarke, who introduced the bill, said the Judiciary and Legislative Investigations committee is scheduled to vote on an altered version on Monday at 1:30 p.m.

"What we're doing now is trying to find a definition we can adapt as an amendment," she said. "A 30 percent threshold, even a 50 percent threshold, did not meet with approval and developers were very much opposed. We would like to go to the gut rehab standard … so that we can begin to assess how that goes and what the costs really are, so sometime down the line, we could expand. But we need to have some working experience first."

Clarke says she's hoping the sprinkler requirement will prevent fire deaths, an idea the Fire Department supports.

But Alan Chantker, president of the Mid-Atlantic Real Estate Investors Association, said even a higher threshold for sprinklers would mean fewer rehabs in a city with a lot of deteriorating homes in need of help.

"It's going to add a substantial cost," he said. "When you're talking about houses that might only sell for $60 to $120 [thousand], that cost might be enough to tip you from profit to no profit."

You had a lot to say about the original proposal. What do you think of this idea?
Posted by Jamie Smith Hopkins at 7:00 AM | | Comments (13)
Categories: Real estate investing, Renovation/rehab
        

Comments

10 grand is a major impediment for someone attempting to rehab their first home and not just flip it.

Bad idea. If it's not required elsewhere why stifle development in a city that *desperately* needs new residents that pay taxes?

Hi,

Well maybe the city should mandate these sprinkler's on every boarded up home owned by speculators who have no intention of ever rehabbing anything at all.

Really its going to take a total collapse of the housing market in Baltimore City before anyone in the council does anything tangible to improve the market.

Oh wait that collapse has already happened.

Fran In Baltimore

I wrote to Councilwoman Clarke about this cockamamy bill. We are in the middle of a recession with a depressed housing market and people losing their jobs left and right and she wants to require homeowners to put out an extra 15 thou on a small rehab? The new law is no better. At least landlords can amortize the cost, write it off and build it into the rent. For homeowners it's nothing but outlay--we have no chance of ever getting the money back.
I asked her, of the 25 fire deaths in 2009 and 19 fire deaths in 2008, how many took place in rentals and how many in homeowner-occupied homes? My guess is that homeowners are far more careful in their own properties than renters are in the landlords'.
Exempt homeowner-occupied buildings from this law. And find out which city councilmember's brother-in-law owns a sprinkler business.

So, you can save $13,000 but 4 people will die in the next row house fire? And 5 more the next month? I can't believe that we are willing to exchange the lives of tenants and further risk the lives of firefighters who try to save them because of a $13,000 safety upgrade. Has anyone ever considered that the reason fire insurance rates are so high in the city and the reason that there are so many boarded up homes following a fire is because there were NO safety features to prevent serious damage and loss of life? Many of these rehabbers never insure their properties with enough coverage to rebuild/repair them because the cost of insurance is so high. Why so high? The complete loss of multiple row homes due to uncontrollable fires. Gotta stop the insanity at some point.

re: CronosFT Not sure the points are relevant or interrelated... OK so cast people who oppose spending $13000 they don't have as death mongers. Makes for very sensible debate.

The City would see more rehabs if they didn't shoot themselves in the foot by having high property taxes and now mandating installation of 10-15k sprinkler systems.

More rehabs equals better neighborhoods and more tax revenue.

Im writing this a few days late so i doubt whether anyone will read this. But i wanted to say this anyways .

In the past twenty years there has been a tremendous amount of rehabbing of rowhomes in baltimore.

Partly this was due to the housing bubble. But mostly it was due to the fact that we had many blue collar neighborhoods like Canton and Fells Point that were within 40 miles of Washington DC. And as little as 15 years ago there were houses in these nice areas from $25,000 for an unrehabbed house to $60-80 thousand for a rehabbed house.

The City wasnt responsible for the gentrification of places like Canton. It was the law of supply and demand. Canton was seriously undervalued. Despite what some people think Canton was never a slum.

We do have slums in Baltimore. and they were never fixed up during the boom. What happened was that Baltimore's blue collar neighborhoods were gentrified.Our nice neighborhoods were just made more expensive. There were no "Bad" neighborhoods that were made "Good".

Speaking as someone who excavates basements and does interior demolitions on rowhouses i would simply like to state the obvious and say that the low hanging fruit is gone.The areas that are left to rehab are low profit and high risk areas.

The rowhouses in areas like the neighborhoods just north of East Baltimore Street,which arent that bad areas, are full of houses that CAN be rehabbed but are high risk-low profit projects.

These are areas where you can buy a house for $20,000 and put $20-30 thousand into it and maybe, just maybe, sell the house for $60-$80,000.Thus making a $15,000-$30,000 profit for 3 months work.

But with a $15,000 sprinkler system that profit disappears.

This along with the new lead rules have literally made it impossible to make a profit by fixing up houses in most of Baltimore.

As far as the lead rules are concerned there will still be interior demolitions. They will just be by unlicensed contractors who arent afraid of losing thier license.Guys like me just cant "pass the cost on".

Everyone in SouthEast Baltimore knows who will be doing the demolitions. and everyone knows that he has paid off the right inspectors.

I started out as a day-laborer in this town. I worked for 365 days for 5 years straight once. I worked hard and i struggled but i was finally able to start my own business.

I may have pushed my tools around in a shopping cart[and i still do] ,but i paid my guys well and on time and i did quality work without cutting corners.I got a license and i paid my insurance.

Now the City is basically putting me out of business . The crooks will still thrive. they always do.But the honest guys will suffer.

There is basically very little rehabbing going on in Baltimore. i have been riding my bicycle to Northern Virginia every few weeks and have been staying at a cheap motel to work down there .

I am now trying to find temporary lodging and work in the York PA area.

I own a house in Highlandtown and i love Baltimore. But the City Council is desperately trying to kill the construction industry in Baltimore as far as the small businesses go.

I am sad to say that i see no other future for me in Baltimore other than as a day laborer.And even that doesnt offer much work now.

I have seen Mary Pat Clarke at volunteer events and i dont doubt that she is energetic and wants to improve the city. But she has obviously not thought out the consequences of her bill.

This is not going to be a matter of a few rich guys making $15,000 less on each house. This is going to be about guys with low profit margins going out of business because they cant afford to fix up houses.

I never have made more than $17,000 in my life. And i was never sad about that. I was content with my life and my income. But now even $ 15-$17 thousand dollars a year is something that i cannot achieve working construction in Baltimore.

I am a hard worker who has never been on unemployment or any kind of welfare. But its obvious to me that the City doesnt care about people like me.

It cares about the very poor and the very rich. But it has no time for middle class workers like myself.

Im sorry for the rant Miss Jamie but i wanted to get that off my chest.

best regards to you and thank you for keeping people like myself informed about these issues

Hey Pete,
As one of the guys with the low profit margin - Thanks for your well written reply.

Unfortunately I do understand where Pete from Highlandtown is coming from. I have been in the Baltimore area for only a few years now and I really wanted to make Baltimore city my home. When I moved to this area I wanted nothing more than to buy a little rowhouse, rehab it and to enjoy all of the conveniences of city living. I ultimately chose to purchase my home in the county. The high taxes and high crime were major factors contributing to my decision not to move into the city. Factors other than taxes and crime influenced me not to move into the city. As a solidly middle class person (single, no children with income >70K) it seems as if this city was not really that interested in attracting people like me. And from the look of census data more and more people are coming to that same conclusion as the city continues to lose its tax base. The city has lost 100,000 residents since 1990! That might explain why they can't balance the budget. There is an ever shrinking tax base. I have been a liberal my whole life …… However I have now learned that there really needs to be some balance within the city government. This city is going to tax all of its taxpaying citizen's right out of the city. Then what? I suggest new leadership and fresh out of the box ideas people! The city has to offer it taxpaying residents something (other than taxes) or else they will leave!

Pete, another thanks for such a real life and down to earth sense of the market.

P.S. with initiatives like this, I'm coming darn near to selling my home, without improvements (i.e. finished basement) that I had hoped to make and at a loss, rather than face more headaches.

Any new developments regarding the installation of sprinklers in rehabs? I briefly saw something on the news the other day but missed the details.

Jaded, thanks for the reminder -- I'd lost track of that. Just checked with Councilwoman Clarke: The bill passed, but only for new construction, not rehabs. I'll have an update on the blog in the next few days.

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About Jamie Smith Hopkins
Jamie Smith Hopkins, a Baltimore Sun reporter since 1999, writes about the regional economy. Her reporting on the housing market has won national and local awards. Hopkins is a Columbia native and has lived in Maryland all her life, save for 10 months spent covering schools in Ames, Iowa.
She trained to become a wonk by spending large chunks of time as a geek and an insufferable know-it-all.
Baltimore Sun articles by Jamie
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