New Gas Inspection Regs Could Cost Millions

Two people died and more than a dozen were injured when an explosion and fire destroyed three buildings in the East Village in March of 2015. An illegal tap into a gas main was to blame. In response, the city council has passed a new law requiring an inspection of all gas lines every five years. The new regulations take effect in January of 2019, but it’s already apparent that the implications for co-ops and condominiums – especially those on a tight budget – are huge.

“Most New Yorkers are unaware of the costs involved should a leak be discovered in their building,” says Charles M. Zsebedics, general manager at Amalgamated Houses co-op in the Bronx. “This new local law will expose buildings to test for safety, and that’s a good thing. The flip side is if a leak occurs, and you have to shut it down, it’s an enormous expense that almost no building has enough funds in reserves to deal with.” Depending on the size of the building and the extent of gas leaks, Zsebedics says, repairs could cost millions of dollars. 

Several superintendents, property managers, and co-op board members wishing to remain anonymous have echoed Zsebedics’ concerns. “We want a safe building, but we simply have no way to fiscally prepare for this kind of repair cost soon or five years down the road,” says one property manager. “If our shareholders are hit with a large monthly assessment for this, many will be forced to sell.” 

While the motivation behind the new law might be noble – protecting New Yorkers from deadly gas explosions and fires – Michael Mintz, CEO of MD Squared Property Group, objects to the wording of the law. “It largely refers to visual inspections, looking for corrosion or rust on visible pipes,” Mintz says. “It refers to using a gas-detection meter in public areas, like hallways, lobbies, and superintendents’ workshops. These measures don’t necessarily ensure the safety of residents. The law mentions nothing about pressure-testing the lines, which is complicated and expensive.”

When a leak is detected, gas service is shut down. Pressure-testing, which is required by law before Con Ed can restore gas service, subjects gas lines to much higher stresses than natural gas exerts. This often reveals latent – and costly – leaks, especially in older buildings. It’s part of the nightmare of getting “red-tagged” after a gas leak.

“This [law] will affect the industry,” predicts Phil Kraus, president at Fred Smith Plumbing & Heating. “Under the new law, a plumber has to verify whether exposed piping is in good condition. Should that inspection not be done properly, then the plumber, the building, the board, the real estate company – they all become at risk. Because of that, you just have to make sure that the job is done properly. What the city and Con Ed seem to be doing is putting additional responsibility on the buildings and the contractors. What’s happening here is a transfer of liability; the building is basically more responsible for their gas piping.” 

Licensed plumbers who perform the mandated inspections are not the only ones exposed to risk, Kraus adds. “The building owners hire the managing agent. The managing agent hires the plumbers. If there is a gas accident down the road, everyone who signed off on this process is at risk – provided that the inspection was done improperly. Everyone from the past is totally liable for an accident that happens in the future – even the superintendent is at risk if the inspection was not done properly.” 

If plumbers find a gas leak, they must now notify Con Edison first, and then the city. Mintz, the property manager, has a theory about the new law’s ambiguity: “More input should have been provided by utilities and plumbers before this was passed.”