Smoke-free apartments: NAA member discuss the issue: the multifamily housing industry continues to explore and experiment with the feasibility, desirability and legality about offering smoke-free residences. Kreisler shares the thoughts of NAA members about cost, insurance and marketing. (Cover Story).

A frustrated third floor resident complained that he could not tolerate the cigarette smoke wafting from the resident's patio below. The problem was not limited to the open air surrounding the apartment home. When the wind blew, it blew the smoke--and the toxic fumes--into his apartment. Phew.

The result? Greystar Management services, with 40,000 units throughout the Sunbelt and a division of the nationwide Greystar a private real estate investment, management and development company, is talking with legal counsel about how it can prohibit smoking at one of its newest communities in St. Petersburg, Fla., designating 80 one-, two-, and three-bedroom units out out of 381 units in 22 three-story building which are under construction. The move would give residents the option to rent an entirely smoke-free living environment.

Smoke and secondhand smoke have enranged the American public so that prohibition on airplanes, in restaurants, hospitals, hotels, workplace, government buildings and a plethora of public places has become more the norm than the exception.

The move toward a smoke-free environment has been escalating into the political and legal arenas since the U.S. Enviromnental Protection Agency in 1993 classified secondhand tobacco smoke a Class A known human carcinogen, New York City Mayor Michael Bloomberg in August asked the City Council to ban smoking in all New York City bars and restaurants.

Nonsmokers have become accustomed to smoke-free air, and with an avalanche nationwide of local laws and ordinates nixing smoking in more and more public places, it seems like seems like one of the last bastions of hope for unregulated smoking just may be the confines of one's apartment home.

Maybe.

"If smoking can be banned from entire hotel floors, airplanes restaurants and other public places, then why not apartment homes?" asked Greystar Regional Vice President Dave Watkins who said he wants to push the envelope on smoke-free environments.

"I can remeber 20 years ago when people smoke on planes, and they weren't segregated in a restaurant. But I think it has become a way of life and people today are more aware of the consequences on their health than they were then. Today, people are extremely sensitive and (cigarette fumes) offend them."

The fact is that more and more people are dropping the habit, and anti-smoking groups are not blowing smoke--they are politically and legally sophisticated, reaching out to property owners and managers and offering them such anti-smoking mechanisms as a model lease for a smoke-free property.

According to the American Lung Association, there were 45.7 million adults who were former smokers in 1999. Watkins, though, knows that even with a societal change in attitude that has made people less tolerant, imposing an anti-smoking policy governing living space will be an uphill battle.

On the issue of privacy, said Watkins, you cannot put surveillance cameras in an apartment, the same way that you can in common areas, such as community rooms, hallways or lobbies. He knows that when people light up out in the open--like on an airplane--it is obvious they are violating the law.

The privacy of one's home is another situation, where it is difficult, and even impossible, to monitor the activities of both residents and their guests. On the other hand, as far as health issues go, there are nonsmokers eager to use the Americans With Disabilities Act in their favor, maintaining that toxic smoke and secondhand smoke are harmful to their health.

"It almost has to be a voluntary situation and people have to understand we cannot enforce it 24-7," Watkins said.

So when it's time to lease the properties in St. Petersburg, Watkins said Greystar wants to give applicants the option of leasing in a truly smoke-free building. He said Greystar is debating whether to include a provision in their lease to specifically prohibit tobacco use. He said it is a matter of discussion with their attorneys. At the very least, he said, it will be a self-imposed voluntary prohibition by residents. The enforcement issue is what's prompted NAA's 2001 President, Phil Carlock, CAPS, CPM, ECI Group, Marietta, Ga., to adopt a wait-and-see attitude. Carlock said that is the reason ECI has not tried to prohibit smoking at any of its communities, located throughout five states in the south. He said offering such an option could be a great marketing tool.

"And it's certainly one whose time has come," said Carlock. "We're watching it to see if someone can do it effectively."

Is Tobacco an Environmental Hazard?

The trend is underway. Apartment owners and managers are taking a giant step beyond banning smoking in common areas and now moving into apartments. California, for instance, known for its liberal legislature, has been in the forefront of the issue.

Then, in a historic move in April, the co-op board at the 29-story, 452-unit Lincoln Towers on New York's affluent Upper West Side unanimously voted that starting that month, new buyers are prohibited from smoking inside the apartment and violators would face eviction or be forced to sell their home.

That ban, according to Douglas Kleine, President of the Washington, D.C.-based National Association of Housing Cooperatives, was the first of its kind in the nation to affect a large property. Most bans are imposed by co-op owners at small communities who have an informal agreement to prohibit smoking.

A suit has been threatened by residents at the Lincoln Towers co-op, Kleine said, but a legal challenge is not likely until an applicant is actually turned down for ownership based on the ruling. It will likely raise issues such as diminished marketability for the seller and a privacy right for the purchaser. If it reaches the Supreme Court, it has got to be recognized that the current court, on such issues as abortion and police use of infrared cameras to snuff out marijuana, has ruled on the side of privacy.

"And it's also going to create an interest alliance between big tobacco companies and the ACLU," said Kleine.

In a Federal Trade Commission annual report released earlier this year, it was found that cigarette manufacturers spent $9.57 billion to convince people to smoke. On the New York co-op board's decision, Kleine maintains the board was just doing its job. "They responded to an indoor air quality issue in a responsible way," he said.

No lawsuit has been filed, but a pragmatic attorney for the co-op board, Stewart Saft, commented on a propensity for litigation, "This is America. This is New York." The co-op board responded to the initial screaming opposition to the ruling by sending a survey to owners and received more than 400 responses and suggestions in return. "Now, they're wading through them," Saft said.

The issue also brings to mind the March 2002 Supreme Court decision upholding the fairness of a federal drug law permitting the eviction of public housing residents because of drug use by any resident or guest, even if the drug use takes place off site and without the resident's knowledge.

The difference is that under federal law, smoking tobacco is not illegal and tobacco is not an illegal drug. Unless there is state legislation prohibiting smoking in residences, an owner would need to have a lease or house rules with a provision addressing the issue of tobacco use to control smoking by residents and their guests, said Kathleen Belville, a partner with the California law firm Kimball, Tirey and St. John, which specializes in landlord/tenant disputes.

California, like nearly every other state, bans smoking in public areas. Anti-smoking advocates use California/EPA Proposition 65, the Safe Drinking Water and Toxic Enforcement Act of 1986, as a basis for legal action against owners. While its title implies that it is a safe drinking water law, Proposition 65 also deals with the public's right to know of environmental hazards in public places. It also identifies tobacco smoke and nicotine--the chemical that causes it to be a developmental toxin--as substances harmful to unborn children. Therefore, allowing cigarette smoke on their property can serve as a basis for legal action against owners.

Proposition 65 requires businesses with 10 or more employees to provide notification about exposure to toxic chemicals and directed the governor to publish a list of chemicals known to cause cancer, birth defects or other reproductive harm. As of January 2002, the list contained 690 chemicals.

Recently, enforcers have issued notices of violation to owners of apartment buildings where smoking in common areas is allowed, but who have not posted the required "clear and reasonable warning" cautioning residents, the public, office and administrative staff, security personnel, maintenance workers and service personnel of their exposure to tobacco smoke. The smoke is identified as both a carcinogen and a reproductive toxin, as are more than 40 other toxic chemicals that are components of secondhand smoke, including arsenic, carbon monoxide, nicotine, lead, benzene and formaldehyde.

Belville said her firm has developed a printed notice for clients to post at their communities in an attempt to comply with notification requirements.

"We have professional plaintiffs who've decided that smoke constitutes an environmental hazard and they are suing larger property owners," Belville said.

There have been state legislatures that have grappled with the issue of regulating smoking, most notably Utah, which five years ago defeated a bill that would have classified second-hand smoke as a nuisance.

More often, though, laws and regulations governing quiet enjoyment and breach of warranty of habitability are the foundations of landlord/tenant disputes. As for quiet enjoyment, residents argue that they are entitled to live free of secondhand smoke; as for breach of habitability, they claim that, as a result of others smoking on the grounds or in other units, their apartment has health, safety and welfare conditions that render it inhabitable.

While the American Lung Association maintains that secondhand smoke that seeps in from a neighboring unit can pose both a health threat to sensitive individuals and a significant nuisance, one's apartment remains one's private domain, even though legal positions such as nuisance, battery, breach of quiet enjoyment, warranty of habitability, negligence, harassment and intentional infliction of emotional distress have been the grist for courtroom drama.

A Marketing Make-Good

In San Diego, for example, a condominium owner successfully obtained a restraining order to prevent his neighbor from smoking in his garage, which was underneath the plaintiff's home. In Utah, a state law was passed that drifting tobacco smoke may constitute a nuisance and that a resident may bring suit to stop the nuisance and recover damages, unless the lease gives notice that smoking is allowed in other units.

Belville said that while it is smaller properties that more often are adopting smoke-free policies compared to larger ones, the trend will move to larger properties as sensitivity to smoke heightens even in common areas and more and more people become nonsmokers.

In California, for instance, said Belville, surveys have shown that approximately 83 percent of the population reports being non-smokers. Even though only 17 percent of the population would be excluded by establishing a smoke-free policy, the fear of reducing marketability prevents many owners from taking this definitive step. On the other hand, a smoke-free environment might be considered a selling feature.

"Prohibiting smoking is similar to allowing pets," Belville said. "A certain segment of applicants may use the owner's policies on that issue to help them choose between two otherwise comparable rental properties."

With 39 single and two- and four-multifamily properties in Nevada and California, Dawn Fandel, Fandel Property Management, San Diego, is one owner with a handful of smoke-free units. Eight are smoke-free and as the other units become available, she is rehabbing them and making them smoke-free, too.

Fandel admitted that it takes longer to rent a smoke-free unit but she is adamant, and has registered her units with the Smokefree Apartment House Registry, and has posted signs and ads proclaiming the availability of smoke free apartments. Before an applicant signs the lease--which has a provision about no smoking--Fandel even sniffs their fingernails to make sure there is no smell of nicotine.

No one has ever objected, she said. "I intend to make them all smoke free," Fandel said. When that happens, she said she will ask her insurance company to reduce her costs because she has reduced the risk of fire.

But woe is the building manager or maintenance staffer whose workplace is a residential property and who must enter an apartment in the performance of work. While individual states have labor laws prohibiting smoking in the workplace, apartments are exempt.

NAA as Watchdog

Sharon Burkey, President-elect, New Jersey Apartment Association (NJAA), NJAA Legislative Committee Chair, Partner, Roseland Property Co., Short Hills, N.J., is cautiously awaiting the outcome of the New York co-op issue. Burkey predicts that smoking will become a major industry challenge--just like lead and mold--which resulted in significant regulatory changes and tens of millions of dollars in litigation.

"It's going to be a tough subject as time goes on," said Burkey who is monitoring the co-op case. "It could potentially impact us and drive us to make decisions about the way we manage our properties," she said.

"We are a litigious society. People will sue for whatever reason and if there isn't a federal or state law that supports our decision, we are opening ourselves up to potential legal expenses."

A simple resolution is to include a clause in the lease prohibiting smoking in the unit, just as the New York co-op board did, said NAA General Counsel John McDermott, because an agreement not to smoke is as binding as any other clause.

"It works because with a lease, the relationship between an owner and a resident is contractual. If a resident agrees to the terms of the lease, then it's no different than any other part of a contract and therefore enforceable," McDermott said.

The problem is that some states regulate contractual relationships, limiting, for example, an owner's access to a unit once it has been leased. "The State of Washington, for instance, requires that an owner give the resident 48 hours notice for access and if the resident still refuses, recourse is a court order," McDermott said. In fact, throughout the nation, local ordinances and state laws take different shapes and further complicating the jurisdictional issue is the fact that state laws supercede local laws.

For residents who want to rely on the Americans With Disabilities Act, claiming that their smoking habit is an addiction and, therefore, protected, they will find little protection by the Supreme Court, which has ruled that smoking does not qualify as a condition that needs accommodation under the ADA, said McDermott. The issue has already been raised when a place of business went smoke free and employees challenged it, maintaining that smoking is a health condition and they were discriminated against because a reasonable accommodation for a health condition wasn't made, he said.

"If people agree to contract with each other and it's not prohibited by state or local law, it is enforceable," said McDermott.

Ah. But what happens when a resident agrees to live in a smokeless environment and mom the smoker comes to visit and the neighbors complain? Do you evict? "It is a business decision which must be made. Practical issues are going to arise," he said.

The Insurance Perspective

From an insurance perspective, prohibition makes sense, said John Cavanaugh, Associate Partner at John L. Wortham and Son, LLP, which is among the nation's top 20 insurance brokers.

"You see many fires that are caused by people who smoke in bed, that results in tremendous personal and property loss, and it's a problem that increases as residents who smoke become older, particularly at subsidized properties," Cavanaugh said.

Cavanaugh's comments are backed up. According to the Center for Disease Control and Prevention, there are more than 400,000 residential fires each year and smoking is the leading cause of fire deaths. A National Fire Prevention Association report released last year, The U.S. Smoking-Material Fire Problem, also found that smoking materials, such as cigarettes, cigars and pipes, are the third leading cause of fire injuries in the United States.

In 1999 (the most recent statistics available) 140,000 fires associated with smoking materials resulted in $412 million in property damage, most occurring in residential properties, primarily ignited by cigarette ash that had fallen on mattresses, bedding and upholstered furniture.

"A smoking ban would significantly increase the safety of all residents and increase the desirability of insurance companies to write policies," said Cavanaugh, an expert and frequent speaker on such issues as loss control, particularly in the current underwriting market that's seen unprecedented insurance rate increases.

Cavanaugh said there's no rating formula that gives credit for smoke-free properties, but he projects that could change. "I wouldn't be surprised as more and more properties become smoke-free," he said. "It will certainly make properties more desirable to the insurance underwriter because it will give the insurance industry an opportunity to reduce the cost of coverage," he said.

Watching the Air Clear

"I am sure the hotel industry was ahead of the curve because they were aggressive in imposing nonsmoking rules,' said Scott Gardner, 2002 NAA President and Founder and President of Crosshaven Properties, a fee management company in Tulsa, Okla.

Gardner, who primarily manages U.S. Department of Housing and Urban Development (HUD) subsidized properties for the elderly, admits that getting elderly smokers to quit would be difficult, if not impossible, and getting HUD to approve a lease change is another questionable issue as conventional leases do not apply to subsidized housing. About five years ago, Crosshaven did what has become standard in the industry--it prohibited smoking in all interior hallways.

"This will be an emerging issue if we choose to make it one," said Gardner, noting recent Tulsa legislation banning smoking at all restaurants. "It's a wave that's sweeping the nation. Perhaps with the drop in the number of smokers, there won't be so many smokers .left and it won't be an issue."

Web Site Resources

Many Web sites exist with resources about current lawsuits and settlements, legislation and policies, state and local laws and ordinances, model leases, a survey of owners and renters, and even a registry of smoke-free apartments. Go to these sites and you will find links to even more.

* www.no-smoke.org Americans for Non Smokers Rights

* www.tdsg.org Smoke-Free Environments Law Project

* www.smokefreeapartments.org A registry of smoke-free apartment homes in California

* www.ASH.org Action on Smoking and Health

* www.ansrmn.org Association for Nonsmokers--Minnesota

* www.stateoftheair.org Reports of the American Lung Association

* www.tobacco.org Information about tobacco

RELATED ARTICLE: Smoking legislation being monitored by NAA.

As part of its mission, NAA monitors legislation that affects the multifamily housing industry. This year, several pieces of anti-smoking and secondhand smoke legislation that could affect NAA members are being tracked. Although none address the banning of smoking in apartment units, here are some of the bills being tracked by NAA:

In California, AB 1867 would prohibit smoking and disposal within 25 feet of a playground or a tot lot sandbox area. Current law prohibits anyone from smoking a cigarette, cigar or other tobacco product, or disposing of same within those areas. The bill passed the Assembly and is expected to pass the Senate.

In Michigan, SB 205 would create a smoking ban in apartment buildings. The bill is pending.

In the latest of cases lost to West Coast juries, Philip Mom's Cos. is the defendant in a Los Angeles court, sued by a former longtime smoker who wants to be compensated for her lung cancer. In 2001, in California, the world's largest tobacco company was ordered to pay another smoker $3 billion. The verdict was subsequently, reduced to $100 million. In addition to last year's verdict, the company has been told to pay about $180 million in two Oregon cases and more than $48 million in two cases in San Francisco.

On the heels of the California Supreme Court paving the way for thousands of sick smokers to file claims against cigarette makers, a Boston law professor and co-founder of the Tobacco Products Liability Project has organized a conference for like-minded lawyers, set in San Francisco for November

In August, the California Supreme Court held that an immunity statutes protection does not extend to allegations that tobacco companies used additives that exposed cigarette smokers to dangers beyond those commonly known to be associated with cigarette smoking.

The California State Senate in August approved a bill prohibiting smoking within 25 feet of a children's playground. Current law is limited to barring smoking or disposing of smoking material in a playground or tot sandbox area. The fine increases from $100 to $250.

B. Kreisler, ImPrint, LLC, is a consultant to the affordable homing industry. She can be reached at 703/366-2861 or e-mail imprint, [e-mail].