Real estate's new "lead" balloon.
Anyone can get lead poisoning; however, the risk to children under seven years old is the highest. Early childhood exposure can cause anything from hyperactivity to death.
In the early 1960's, the level of lead in paint was voluntarily set at 5% by industry standards. There was no official federal legislation until 1971, when the "Lead-Based Paint Poisoning Prevention Act" was passed, prohibiting the use of paint containing more than 1% lead in all residential buildings receiving federal assistance. In 1972, the Consumer Products Safety Commission limited lead levels in residential paint to 0.5% and then to 0.06% in 1978.
The LBPPPA set requirements and guidelines for public housing in 1987. In 1991, Centers for Disease Control and the Department of Health issued recommendations for preventing lead poisoning in children which included coordination between public agencies and pediatricians. In 1992, the Residential Lead-Based Paint Hazard Reduction Act, also known as Title X, was passed, adding chipping, peeling and dust as lead offenders. The Act required screening children under six, assessing the risk in housing, schools and hospitals through sampling, and removal of the hazard. The goal was to assist property owners and government agencies in reducing exposure without adding unnecessary costs.
Until recently, there was Local Law 38, which was placed into effect in 1999. Under this law, housing owners had to make a good faith effort to determine if a child under the age of six lived in a unit. If so, an annual inspection had to be made to correct any lead paint hazards. Any hazards found were to be remediated within a specific timeframe. Most importantly, landlords were given immunity from financial damages in negligence lawsuits if they had no knowledge of lead paint in the apartment.
In 2001, New York City had 452 reported cases of lead poisoning, an amount that was 65% lower than in 1996. In 1996 there were 14,406 cases of less serious lead levels. In 2003 that number was down to 4,656. The laws were working and compliance was high.
Today, we are faced with a much more onerous revision of Local Law 38, one that places the entire responsibility for lead, whether it exists or not, directly on the shoulders of real estate owners.
The sad, but very real fact remains that any additional financial burdens placed on the real estate industry can have a devastating effect. One of the biggest problems in New York today is housing shortage. Any form of artificial control on this sensitive market is likely to cause a further imbalance. A decrease in supply will cause an increase in rents. Owners of real estate will be forced to spend their already crimped bottom-line dollars shadow-boxing with lead based paint litigations. Instead of rehabilitating, they will be forced to deploy their dollars in court, dealing with a demon that may not even exist.
This will undoubtedly cause a domino effect. The incentive to rehab existing low-income and affordable housing will be non-existent. The many needed affordable units will be taken out of the housing inventory as owners face a better chance of survival by keeping them unoccupied. Those owners who will make their units available for habitation will require much higher rents to cover the increased costs of the additional financial demands. Bringing a unit to decontrolled status will be much easier with the higher costs added to the renovation equation. The opposite of what is needed today.
The effects on redevelopment are already evident. Financing is more difficult to obtain, as lenders now require indemification. Insurers are raising rates in the event that an owner will be sued if someone decides they would have had a higher IQ if they lived in a lead-free apartment.
Money that was targeted for renovations will go towards new luxury housing. This, by the way, will most likely be the only housing choice left for tenants as owners and developers abandon the less desirable lead targeted units.
A tighter lead law will give incentive for owners to discriminate. Why would anyone want to rent to families with young children, or newlyweds or immigrants who come from countries with no lead laws?
There are no new medical facts on which to base this current increase in measures. In the 1970's, the average level of lead in children was 25 micrograms--10 times more than now.
Lead poisoning has greatly decreased from when we were children. Today's crop of kids should outperform all of the brain-damaged adults. It is time for individuals to take personal responsibility for themselves and not blame landlords for all that is wrong with the world.
BESEN & ASSOCIATES
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|Title Annotation:||Insiders outlook|
|Publication:||Real Estate Weekly|
|Date:||Sep 1, 2004|
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