AvalonBay Fire Spurs Suits, Calls for Code Review

A fast-moving fire that destroyed part of an AvalonBay Communities Inc. apartment complex in Edgewater, New Jersey, has sparked lawsuits and calls by elected officials to consider overhauling the state building code.

Fire officials said maintenance workers using a blowtorch triggered the Jan. 21 blaze, which spread rapidly and destroyed the larger of the two buildings in the 408-unit complex because of the lightweight wood construction. No one died, but hundreds of people were displaced in the complex across the Hudson River from Manhattan.

Alessandro DeMarco and his wife, Amanda Bayer, were forced to move out for four days. They sued for negligence on Thursday in federal court in Newark, New Jersey.

AvalonBay should have known “the risk was increased when using lightweight wood construction and/or in allowing a blowtorch to be used in close proximity to these flammable materials,” according to the complaint in the proposed class-action suit.

Two other suits were filed this week in state court in Hackensack.

State Assemblyman Scott Rumana, a Republican from Wayne, is drafting a bill to halt new construction and approvals of multifamily housing until the state’s building code is revised “to ensure that the structures are safe,” he said. The moratorium would last as long as two years, he said.

‘Massive Spotlight’

“The fire in Edgewater has put a massive spotlight on the problem of the way that these structures are built and the firetraps that they really are,” Rumana said. “The lightweight construction of wood and truss roofs clearly creates a dynamic that should a fire occur, it’s completely devastating and nothing can stop it.”

Mercer County Executive Brian Hughes and Princeton Mayor Liz Lempert on Jan. 26 called for a review of the state’s Uniform Construction Code. It should take place before the state Department of Community Affairs reviews a proposal by AvalonBay to build 280 housing units in Princeton, they said.

“If there’s going to be changes to the Uniform Construction Code, which I certainly hope there will be in light of the Edgewater fire, then we want the DCA to be reviewing Avalon’s plans for Princeton against the most updated code requirements,” Lempert said in an interview. “Thank God that nobody died in Edgewater. It’s an opportunity and a wake-up call that there’s something wrong with the codes and they need to be looked at.”

State Spokeswoman

A spokeswoman for the Community Affairs Department, Tammori Petty, didn’t respond to an e-mail seeking comment on the request for a code review.

Edmund Rhoads, a spokesman for AvalonBay with Kreab Gavin Anderson, declined Friday to comment on the lawsuits and the state’s building code.

In a Jan. 22 statement, Michael Feigin, AvalonBay’s chief construction officer, said wood-frame construction is “standard, common and safe” for multifamily housing, and the complex was built in accordance with fire and safety codes applicable at the time.

Wood frame probably won’t be eliminated in New Jersey because of the higher cost of concrete and steel, Alexander Goldfarb, a real estate analyst with New York-based Sandler O’Neill & Partners LP said today in a memo on AvalonBay.

Developers would have to build high-rise buildings for such materials to be worthwhile, and “we don’t see many suburban towns approving” apartment houses of more than 10 stories in the state, he wrote.

11 States

AvalonBay, the biggest publicly traded U.S. apartment landlord after Equity Residential, owns or has a stake in communities in 11 states and the District of Columbia, with a total of 82,333 units. It finished the Edgewater complex in 2002 after spending almost $80 million. Two years earlier, a fire destroyed the site during construction.

In announcing earnings on Jan. 28, Arlington, Virginia-based AvalonBay said one building in the complex with 240 units is uninhabitable and a second with 168 apartments “only suffered minimal damage.”

“The company believes this incident is substantially covered by its insurance policies, including coverage for the replacement cost of the building, third party claims, and business interruption loss,” it said in a statement.

Under its self-insured portion of property insurance, the company is obligated to pay 12 percent of the first $50 million in losses, according to the statement.

The complex was 97 percent occupied in 2013, AvalonBay said in its most recent annual report. Monthly rents averaged $2,627.

The case is DeMarco v. Avalon Communities Inc., U.S. District Court, District of New Jersey (Newark).