MAJOR CHANGES IN BUILDING LAWS

Over the past few weeks, the nation has painfully witnessed the moment-by-moment tragedy unfold with respect to the failure and collapse of Champlain Towers South’s 1981 twelve (12) story residential unit condominium building (the “Surfside Building”) in Surfside, Florida (the “Collapse”). There is nothing positive about the Collapse nor about the losses that so many people have, are and will suffer due to it with respect to deaths and the fact that the Surfside Building is now completely demolished. However, as discussed below in the past after other real estate tragedies (and regardless of whether the applicable tragedy was due to human error or the environment), significant beneficial changes were made to all types of real estate building, construction, inspection, inspection, fire prevention and life safety laws, codes and regulations (collectively, “Building Laws”). Therefore, it is imperative for structural engineers, architects, planners and designers to figure out how the Collapse happened; and, afterward, use their newly acquired knowledge to demand those appropriate changes be made to current Building Laws to prevent future disasters.

With respect to the Surfside Building, under current Building Laws, the Building was undergoing the required Miami-Dade County (the “County”) forty (40) year inspection (“40 Year Inspection”). The contents of the 40 Year Inspection appear to have revealed a number of material defects with respect to the Surfside Building (i.e., massive corrosion and deterioration of structural components of the Surfside Building) and the Collapse is being investigated by government officials. In the meantime, discussions have started as to the frequency of inspections; with some suggesting that all buildings in the County be inspected in accordance with the most up to date Building Laws at perhaps twenty-five (25); thirty (30) and thirty-five (35) years from construction to avert such tragedies in the future. However, regardless of when the inspections are required to be made in the future, it is imperative that all future inspections be carried out properly in strict accordance with all applicable Building Laws, as amended, and without any graft or corruption whatsoever.

There is a long history of real estate tragedies such as Surfside that have led to changes in Building Laws. For example, on November 28, 1942, 492 people were killed in the Cocoanut Grove fire in Boston, Massachusetts (the “Grove Fire”). Findings from the Grove Fire indicate that the extent of the tragedy’s death toll was exacerbated due to the failure to adhere to certain fire regulations at the property. Specifically, at the Grove: (i) some exit doors were locked to prevent unauthorized entry into the Grove; (ii) elaborate palm-tree décor containing flammable materials was used to decorate the club and (iii) the air-conditioning system was filled with flammable gas because the gas Freon was in short supply during World War II. Following the Grove Fire, new fire-safety laws were enacted in Boston and elsewhere in the Commonwealth of Massachusetts for public establishments. For example, Building Laws were adopted to ban flammable decorations within establishments and to provide that a building’s the emergency exits must be kept open, and a revolving door cannot serve as the sole means of exit and entry.

Similarly, as a direct result of the extreme real estate destruction and devastation of Hurricane Andrew in the early 1990s (“Andrew”), Building Laws of the State of Florida were reviewed, revised and transformed by lessons learned. Specifically, after Andrew, two (2) County grand juries were reportedly convened to examine public policy issues and to make recommendation on changes to lawmakers. The grand juries ultimately found that most of the homes that were destroyed in the County by Andrew, were destroyed “due to a toxic trio of poor design, shoddy construction and inadequate inspection”. As the Washington Post stated best in print: “Hurricane Andrew forced a reckoning that led to Florida establishing some of the toughest storm-specific building codes in the United States, if not the world.” Unfortunately, with respect to Surfside, the Surfside Building was constructed in 1981, which is a date that is almost nine (9) years prior to the date of Andrew; and therefore, any of the new Building Laws enacted as part of the recovery from Andrew would not have applied to the Surfside Building’s construction.

Finally, in 2003, the Station nightclub fire which occurred in West Warwick, Rhode Island (the “Station Fire”) also impacted applicable Building Laws. The Station Fire’s toxic smoke and heat, which were caused when pyrotechnics that were lit as part of a rock and roll concert, resulted in people rushing main exit causing the death of 100 people and injured 230 people. Unfortunately, only 132 people managed to escape unharmed from the Station Fire. Following this tragedy, the Governor of the State of Rhode Island declared a moratorium on pyrotechnic displays at venues that hold less than 300 people. Also, on a National level, the National Fire Protection Association (the “NFPA”) called for an emergency meeting of the NFPA committee handling code for “assembly occupancies”. Based upon such committee’s emergency work, in July 2003, Tentative Interim Amendments (the “TIAs”) were issued for the national standard Life Safety Code that had required automatic fire sprinklers in all existing nightclubs and similar locations accommodating more than 100 occupants, and all new locations in the same categories. These TIAs also required additional crowd manager personnel and were subsequently incorporated into the 2006 edition of NFPA 101, along with additional exit requirements for new nightclub occupancies.

Sadly, now that action at the scene of the Collapse has turned from rescue to recovery, attention will now be focused on prosecutors to find out the exact cause of the Collapse. In fact, prosecutors in Miami-Dade have pledged to convene a grand jury to investigate the Surfside Building Collapse. Like the tragedies described above, attention will shift to the review and analysis of current Building Laws and what changes, if any, are needed to be adopted into law to preclude a similar type of tragedy.

Those in the construction field and building trades can expect changes in Building Laws and inspection procedures will be forthcoming. When those changes do come, it will be important to review and analyze how they may impact the contractual commitments required of builders, lenders, and other related fields.

Since the Collapse, there also has been a growing political movement by members of Congress and the Biden Administration to propose, pass, and implement new disaster mitigation incentives as part of a potential tax package. For example, U.S. Representative Richard Neal, D-Mass, and Chair of the House of Representatives Ways and Means Committee said “disaster mitigation incentives would be part of a broader discussion aimed at developing a permanent tax framework to deal with potential disasters, including extreme weather events linked to client change.” Moreover, U.S. Representative Neal’s comments indicate that the new wave of mitigation tax incentives would be forward looking and designed to curb the impact of future hurricanes, floods, and wildfires. In addition, the Biden administration has proposed a 25 % credit for qualified disaster mitigation expenses capped at $5,000 for homes and businesses either in or adjacent to an area where there has been a federal disaster declaration in the last 10 years. The credit would be phased out for individuals making at least $85,000 and married couples earning $170,000. And in the U.S. Senate, Senator Michael Bennet, D-Colo, who is a member of the U.S. Senate’s Finance Committee, has promoted S. 1805 which is a bi-partisan proposal to provide a 25% tax credit for qualified mitigation expenses capped at $5,000. Expenses that would qualify for the 25% tax credit would include costs for necessary braces and water barriers and protection for roofs, exterior doors and garages. Finally, as a good sign of bipartisan support, U.S. Representative Tom Rice, R-S.C., a member of Ways and Means Committee said he agreed with U.S. Representative Richard Neal and in favor of mitigation incentives and U.S. Representative Rice added “Perhaps the federal government does have a role in encouraging people to prepare for future disasters.”

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This alert should not be construed as legal advice or a legal opinion on any specific facts or circumstances. This alert is not intended to create, and receipt of it does not constitute, a lawyer-client relationship. The contents are intended for general informational purposes only, and you are urged to consult your attorney concerning any particular situation and any specific legal question you may have. We are working diligently to remain well informed and up to date on information and advisements as they become available. As such, please reach out to us if you need help addressing any of the issues discussed in this alert, or any other issues or concerns you may have relating to your business. We are ready to help guide you through these challenging times.