At the start of the episode, Flack references that every building over 16 floors has to have a water tower because of the "dismal" water pressure in New York. It is actually every building over 6 floors that requires a water tower.
At the episode open, tenants would not have noticed blood coming out of their water taps. Human beings have about 10 pints, or 1.25 gallons of blood in their bodies. The body in the tank is pictured as still bleeding out so the amount of blood in the tank would be less than that, while the tank is at least 18 feet tall by 10 feet wide, holding more than 9000 gallons. Diluting the blood to that extent would make it undetectable until decomposition affected the odor and taste.