Wednesday, July 18, 2012

Walking Away From A Few Million Dollars... Part 3: Inspectors and Codes

On day one, we pretty much knew that we had some sort of financing in line. It was just a matter of finding someone who wanted to do the deal (which, was pretty easy since the numbers made so much sense). As such, I was now doing all I could to talk to the various state and local agencies that we would be dealing with to get them on the same page that we were for an easy renovation process... due to the nature of the risk we were taking on if we didn't have everyone on the same page, this had to be taken care of well a head of closing

When reading on the different jurisdictional authorities, it seemed that the main building with the 1 BR units would fall under the state due to it's Titanic size, but the smaller 2 would be overseen by the city. That said, due to the size of the complex, it seemed that the city didn't want to have much to do with it, but then again, neither did the state. When it came to the inspections that would occur every time a unit rented out, the City Frankfort would address those.

When talking with them, the standard introduction was the total truth: "Hey! My name is Jeff Moore. I am in the process of buying this boarded up apartment complex that has fallen into disrepair and has been abandoned for 2 or 3 years. I am wanting to talk with you about it, because there is a lot of work to be done and I need to figure out how to make it safe, profitable, and something that the community can be proud of again. Can you help me out?"

A lot of things, we were trying to improve simply because we wanted to. Certain matters of code are not really aplicable in all situations. For example, I would argue that the banister on the outsides of the buildings would be very easy for a kid to fall through. As such, we were wanting to alter them. When bringing that up to the state, it was the sort of thing where the construction that was existing didn't readily accomodate new codes. It was an interesting situation where if we made something safer, that wasn't always good enough, because if we did one thing, we would likely need to do it all. For the stairs, it seemed as if it might be easier to tear them down and start over due to some interpretations of clearance issues, that ironically, would have made this particular case harder to navigate. Or, we could do nothing (which, probably would have been fine, since they were pre-existing and met code when built). Though, putting up some sort of cast lattice work could be considered a decoration and accomplish our main goal.

This experience highlights the one thing that was evident from day one of meeting with the various government agencies: none of them really wanted to make a definite call as to what needed to be done or even who should regulate it. I was almost always told something to the effect of "just talk to a licensed trade person and they will know what to do." The problem with that, is that a contractor is naturally going to try to juice their customer for as much money as they possibly can. When it comes to finding out what upgrades need to be made for code, it is in their best interest to say "well, while both of these fixes are safe, the state is going to want you to do this one (that is more expensive)..." Right. That sounds like a hell of a plan to me...

Since the whole complex had been vacant for a long time, it was pressing to find out if the complex had been condemned. The head of the city's code enforcement had assured me that it had not been and that he had "closed out the file on it." The Fire Chief however, was certain that it had been, since he was there on New Year's Eve a few years back when they were kicking everybody out due to failed inspections. What should be a pretty easy thing to figure out, was actually quite difficult. Given the scope of what needed to be done, meeting with as many inspectors was pressing and as such, took precedence. After all, if the inspectors didn't know what was condemned or what needed to be fixed, who else would? In our minds, it didn't really metter either way, as from where we were planning on doing all that we could to bring things up to code, simply to make the place safe. Besides, when there is a ton of copper missing anyway, it would generally be more work to do a bad job on the project.

To further complicate matters, the general interpretation of code in my state, is that if you touch something, it must be brought up to current code. However, if you are simply replacing an item, you can get around it... sometimes. Basically, this vagueness in the language of legalese means that it often times just depends on the mood of the inspector that you are talking to (or, how much they like your contractor). Generally, this lack of clarity causes a lot of people to simply not get items inspected, which is pretty unfortunate, actually. In the event that you are sure that an inspector is trying to get you to "fix" something that doesn't need to be fixed, it is an expensive and time consuming fight. This generally takes the form of either in lost rents or the need of a Professional Engineer that is willing to back up what you want with their "P.E." stamp.

While I know that inspectors making you do things that aren't really necessary sounds absurd, it happens all the time; in a lot of instances, they don't know the codes that they are supposed to enforce! A good example of a fight with an inspector involves the use of GFCI outlets in bathrooms. Personally, even as a person who leans libertarian, I think that having a GFCI protected circuit should be in building codes for electrical receptacles that are near water... actually, one potentially saved my life once when I was dealing with a sump pump that was not functioning properly. My uncle once ran into a situation where an inspector went crazy over a bathroom wall outlet that was next to a sink that wasn't a GFCI receptacle- alone, a reasonable reason to fail a house for an inspection. That is, until my uncle pointed out that the circuit was GFCI protected by the circuit breaker in the breaker box, which is totally acceptable... the inspector didn't budge, so Bill had the outlet change, as a receptacle that is $15 bucks is a lot cheaper and quicker than appealing something and making the guy look bad.

Since it was vitally important to get the electrical system safe and functioning before anything else, that was the first inspector I got over to the property. Given the amount of copper that had been ripped out, there was not only the risk of people getting shocked on electrical wires, but, also a major fire hazard. The main thing that the inspector was concerned about was that there were runs of line that were above a drop ceiling, but staple below the floor joists. While I am still not convinced that this is much of a danger with a drop ceiling, I understand why you would want the wire to go through bored holes in the floor joists for extra protection, or even have them in steel cable. I wasn't convinced that we would have to update it if we pressed the matter, but a few thousand dollars of work on it wouldn't be the end of the world, especially from where a lot of it needed to be replaced anyway.

Additionally, there was some debate as to where we could splice wires together. The inspector made some comment about not being able to to wire connections in the breaker pannel and that we would have to add in additional boxes around the pannel to pass inspection. While I still don't understand why this is a good idea sheerly from a maintenance perspective, as you can't monitor performance of wire nuts when they are sealed in a box behind drywall, but, can at any point when you take the face off the electrical pannel (not to mention that connecting a wire to a circuit breaker is a connection AND in the pannel) we accepted it and figured that we would get our electrical crew to get her to change her mind.

When talking with the state building inspectors, their biggest initial concerns was that we had banisters in the stairwells, adequate lighting in the event of a power outage, doors that had proper fire ratings, and doors that swung out in the right direction and couldn't lock people in in the event of a fire. These were all things that were already there, or, were things that we were going to fix for reasons of pride in the building, safety, and a host of other reasons. They also wanted us to seal up the holes in the firewalls that were not filled in around the plumbing and sprinkler systems. Again, a reasonable request that we were more than happy to do and would have done if left to our own devices.

One of the one of the more agitating stories arose with the plumbing inspectors. On the day that we were meeting with the electrical inspector (literally, the first inspector we met with) while standing in the lobby of the main building, out of the corner of my eye, I saw a state truck pull into the parking lot with 2 older gentlemen in it. They got out of the truck and immediately barged into the building with their flashlights, walking right past me. I was kind of stunned by the move, but despite my thinking it was rude, walked up to them and introduced myself.

In the course of a civil conversation, that by the way, they didn't stand still for as they crawled around the building, it came out that a plumber that we had been talking to about the job told them of the project while getting permits one day... The funny thing, is that I was going to call them that very day about coming to look at the project as we had nothing to hide. When showing them the various issues, they just kept saying "well, you are going to need a licensed plumber to do that."

It was all I could do to keep from saying "What kind of jackass do you think I am!? Even if I had a desire to break the law, which I don't, I am getting ready to take on a Hell of a project smack dab in the middle of where every inspector in the state is employed... And here you are implying that I am getting ready do something illegal!? Are you kidding me!?" Thankfully, discretion won out on that one...

The two gentlemen were really concerned about the lines that came off the pressure relief valves of the hot water heaters. They kept saying that since there were 4 hot water heaters on each line and our line was undersized for that number, we were going to need to size up the line. This is something that I immediately talked to them about. The lines were galvanized pipe and run in such a way where it would be difficult at best and totally un-economical to replace them. This was in addition to the fact that the installation met code when originally built- as such, there is no real requirement to fix what they deemed to be a problem. Furthermore, the code that they cited is likely a touch over reaching, despite being well intended: it assumes that all 4 hot water heaters on the line will simultaneously have their thermostats fail and that they will all build up a crazy amount of pressure due to a gas valve that would be constantly be on, thus activating the pressure relief valve, filling the line with the excess pressure.

Now, I am sure that everyone has seen the Mythbusters where they blow up a hot water heater. However, they actively tried to do that for the sake of the experiment. First and foremost, the worst situation that I could conceive of in regard to this matter at the complex was not in any way, shape, or form going to blow the building up. Secondly, hot water heaters rarely have problems where a pressure relief valve is needed, in fact, said valve is generally the part of the hot water heater that goes bad, develops a small leak of water, and needs to be replaced. Between my uncle and I, we have over 1,500 years of hot water heater life from the houses we own- neither of us have ever had one of our hot water heaters malfunction in a way that caused the pressure relief valve to be used for it's intended purpose. Not once. In fact, other than some stories on the internet, we have never even heard of it happening (which, believe me, would be talked about by the people we know)... Given that, the inspectors backed down on their unnecessary stance pretty quickly.

The HVAC inspectors were probably the nicest out of all of them. We actually all talked in the parking lot for a while about the project. Real jovial guys, actually. They basically said that HVAC units in the individual apartments couldn't heat or cool the hall ways. A pretty reasonable request. One thing that neither they, or the plumbing inspectors really said anything about (which, frankly, really bothered me) was that there were a lot of gas devices that didn't have drip legs on them (see the picture to the right). The sole purpose of them is to catch any debris that is in the gas line and thus, keeps it from clogging a pilot light. Really, they are a really cheap way of ensuring that a device will function properly for a long time. Yet, no one ever seemed to say anything about them missing.

Another item that bothered me was that if we elected to replace the gas furnaces with safer PTAC units (like in hotels), we were told that the total area of the individual dwelling (even in an efficiency apartment) couldn't have a temperature differential of more than 3 degrees. If that code was taken to the extreme, space heaters should probably be illegal. Despite my thinking that the code was unnecessary, as a ceiling fan or opening a door could fix the problem. I more or less said "whatever" as we could put grills in the walls walls to make air flow a bit better for very little expenditure.

After all, we had money to spend and it wasn't as if we weren't getting a steal on the place. Despite the troubles that we were running into, they were bearable. I was excited as ever.

More to come...

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