Building out Bedrooms in a 7 - 8 Foot Basement. Is It Comfortable?

You can have 8 foot ceilings, sprinklers, front and back exits, window wells which make the windows full size, and ceilings that are 3 3/4 feet above ground and floors that are 4 1/4 feet below ground. In the eyes of NYC, since it’s less than 50% above grade, this cannot be made legal to sleep in. What’s the fire safety issue?
Many other cities allow this to be legal, and even encourage people to convert spaces like this to housing, in order to alleviate the housing crunch. Many cities publish floorplans for home owners!
The city even recognizes that they are behind the times. For the ENY pilot program, where they are trying to legalize basement apartments, they changed the “percentage above ground” criteria to be based on window size, which is more important as an escape route in case of a fire!