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Red-Tagged

“The alteration was approved. He was installing a basic floor,” recalls Dee DeGrushe, account manager at Orsid Realty. It was early April, and she had no reason to suspect that events would quickly turn from something mundane into something momentous.

But they did.

While the contractor was hammering a nail into the floor, he accidentally banged into a gas pipe running underneath. He punctured it. “You could immediately smell it,” DeGrushe says, “and you could hear the ‘shh’ sound.” The contractor came screaming out of the apartment. DeGrushe was at the building in under 20 minutes. Within the hour, Chelsea Seventh Condominium was “red-tagged” by Con Edison, and the gas shut off to the entire building. The 120-unit condominium, located at 170 West 23rd Street, would remain gasless for the next four months.

On Edge

Gas explosions in buildings over the past couple of years have made both owners and utilities more vigilant. “Con Edison is just cautious, so if there’s any question about anything, they just shut it down,” says Philip Kraus, president of Fred Smith Plumbing. “I don’t blame them. Why take a chance on it?”

Once a building is red-tagged (an actual red tag is placed on the building’s gas meter to signify that it has been turned off), there is a protocol to follow to get it turned back on. The problem facing your board, though, is that it doesn’t know what the protocol is, it doesn’t know how long it will take, and it certainly doesn’t know how much it will cost.

“It’s not just the repair job that’s going to be in front of you,” says Mitch Firestone, board president of the Chelsea Seventh Condominium. It’s dealing with the uncertainty. That’s what “makes people really edgy. I would say, for 90 percent of our owners, that was certainly the case.”

Because the uncertainty factor is huge, the whole process could be packaged into a game called “Where’s It Leaking?” At the beginning, the only thing that is certain is why the gas was shut off. As the gasless days turn into weeks, then months, you’ll learn what condition the rest of your building’s gas piping is in, and you’ll probably find out that there is more leaking. In order to get a blue card, which means the gas can be turned back on, everything gas-related will have to be brought up to code and the entire building will have to pass a pressure test. In simple terms, this means that three pounds of pressure are blown through the lines – the normal load is one-quarter of a pound. The pressure test is guaranteed to turn up tiny leaks, and they have to be found and fixed.

“If you’re the poor, unfortunate board president that has to deal with this,” says Firestone, “in the context of ‘first world’ adversity, this is pretty severe. You’ll see an ugly side of people that doesn’t often manifest itself. Be prepared for it.”

 

You Need a Strategy

The first step, and probably the most important thing that your board can do, is to start communicating. It sounds so obvious. The challenge at the beginning, though, is that you don’t have anything to say except the obvious: we have no gas.

Begin there, says attorney Lisa Smith, a partner at Smith, Gambrell & Russell, who has had several red-tagged clients in recent years. Boards and managers get so wrapped up in the situation that they overlook this starting off point. “You’re already shut down, so the health and safety crisis is out of the picture,” she says. “[The shareholders have] seen the fire trucks or they’ve smelled the gas. They need to know what’s going on.”

Doug Weinstein, executive director of operations and compliance at Akam Associates, takes it a step further. “You have to manage expectations,” he says. “That’s tricky at the beginning because there’s more that you don’t know, than do.” In a red-tagged building that he advised, the gas was shut off on a Friday afternoon. “We put out a really dinky memo right when it happened saying, ‘We’re looking into this. It might only be a week or so.’ We didn’t have a lot of information to go on at that time, so we kind of soft-pedaled it,” he said. Weinstein knew that the gas-out would probably last much longer than a week, but the board needed to get out something fast. He adds: “A week later, when we had a lot more information, we started doing very comprehensive memos.”

Following a frequent communication schedule will put your board in a proactive spot. This is where all experts agree you should be. You might not know what the plumbing investigation is going to find, but you can tell everyone when apartment access is needed, what progress has been made, and what steps are still to be taken. “Frequent” means, at a minimum, weekly. Slip notices under owners/shareholders’ doors, put them in the mailroom or some other common area, e-mail them, and post them on your building’s communication system (if you have one). Get the word out.

And be prepared for frustrated residents who take to the web or the press to vent, because they will have months to do so. “You really are a punching bag for the some of the owners,” says Orsid’s DeGrushe. In the case of Chelsea Seventh, DeGrushe adds that the situation was improved because the board provided its own communication instead of simply relying on management: “They live there. I think compassion from the board is really key.”

“Like a lot of things in life,” says Firestone, the board president, “communication is almost more important than the actual issue.”

 

Gas-Out Finances

If your building is shut down, be ready to get out a big checkbook.

“Every job is different,” says Kraus of Fred Smith Plumbing. “You might have an idea of why they shut the gas off, but you don’t know the condition of the rest of the piping.” And the cost of finding out and then fixing it can decimate your bank account. In a very large building, you could spend close to a million dollars to get the gas turned back on. In Firestone’s six-story condo, he estimates that the fix could cost up to a quarter of a million dollars.

While you would like to be able to turn to your building’s insurance policy for relief, you’re not likely to find much help there. The reason is “wear and tear.” A total gas shutdown is usually triggered by one event. Fixing what caused that event might be covered by insurance, particularly if it was a result of someone’s misstep. But often the events occur because of age – pipes, risers, and lines simply wear out. “Most policies, ever since Hurricane Sandy, put in an exclusion for wear and tear,” says attorney Smith. For example, the little pinprick holes that often turn up during pressure testing are caused by age.

In Firestone’s condo, despite the gas shut-off being the fault of the contractor, the work required to have the gas turned back on was much more than fixing the damage he caused. “Certain things that break might be two subsystems down the line,” Firestone says, adding: “Call it collateral damage. Insurance doesn’t cover it.”

His advice? “Do not labor under the fantasy that litigation and insurance are going to make you whole.” Nevertheless, say experts, it’s important to report the event to your insurance company.

 

So This Is Why Alteration Plans Are So Important

“One of the things that makes a gas-out harder is [when] alterations have been done,” says John Devall, the Orsid Realty manager of the 354-unit Vermeer at 77 Seventh Avenue in Chelsea. The Vermeer co-op had its gas shut off in October 2014, and has been spending months getting each line and riser tested and then turned on.

Some buildings, says Devall, are now taking tougher stances when it comes to alterations. If an owner wants to move a gas stove to the other side of the kitchen, or add a gas appliance like a dryer, that alteration is not being approved. “Good or bad? I can’t say. For the person who wants to do the renovation their way, it’s not good. From a building standpoint, the less you tamper with a system, the better it is.”

Relocating a gas stove or adding a new gas appliance can be done safely, and Devall recommends that if a building allows this it should require documentation. The reason is that if new branch lines are run during the alteration, the building needs to have this information on record. Alteration plans should be saved, he says, so that in the case of a major event such as a gas-out the investigation can proceed more smoothly. “Owners can change,” he adds “but sometimes alterations are forever.”

Prepare for the Malcontents

Firestone, of the Chelsea Seventh condo, is still reeling from how some of the unit-owners in his building behaved. “As soon as there’s real adversity, you see the really ugly side of some people,” he says. “They brought out the heavy guns for this.”

In Firestone’s case, the controversy surrounded the board’s decision to seek a credit line to pay for the repairs, instead of an immediate assessment. “How do we know how you’re going to spend the money?” some of the unit-owners asked. “Excuse me?” Firestone recalls thinking. “Like what, we’re going to get the line of credit and we’re all going to go to Rio? What kind of vile question is that? It’s really disappointing,” he adds. “Because as a board, we have lost a lot of sleep, a lot of time, a lot of professional time dealing with this. To have that kind of garbage thrown at us... I’m still livid.”

One of the challenges in a gas-out is gaining access to everyone’s apartment to check branch lines and bring connections up to code. “There’s a whole subset of people who are incredibly difficult to deal with,” remarks Akam’s Weinstein. “The burden falls on the building staff, who have to perform a ton of outreach to these folks.”

Ultimately, though, everyone has to stand strong. “Well, this is the deal,” the staff needs to say. “We’re coming in now at this time and day, and we really need the access. You either have to be around or give us the keys.”

Uncertainty, expense, inconvenience, and the inability to cook are the ingredients that bring out the malcontents. It’s hard to prepare for this, and harder yet to handle it over a period of months. After being put through the gas-out wringer, many a board member has thought about throwing in the towel. Yet something keeps them hanging on.

“People already know this is a thankless job.” Firestone observes. “At the end of the day, to leave just because there are some misbehaving ‘third-graders’ in the class is probably not a mature thing to do.”

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