Building Tech & Products

Fire Wall: Cali Regulator Inflames Developers With Calls For Curbs

What happens in California, doesn't stay in California -- especially when it applies to new policies that can impact residential real estate development.

John McManus June 7th, 2021

Climate and construction, ever an uneasy balance of the human need for shelter and the forces of nature, appear to be headed on a collision course.

In this case, it's not man against nature so much as people against people. People, that is, who lack the will to solve the complex challenge of community development on a planet whose balances have been disrupted.

This past week, New York Times climate correspondent Christopher Flavelle reported:

California’s insurance regulator has backed sweeping changes to discourage home building in fire-prone areas, including looking at cutting off new construction in those regions from what is often their only source of insurance — the state’s high-risk pool.

The initiative, Flavelle notes, speaks to an impact on real estate – not just in California, in states and locations nationwide whose land mass is at high risk of natural hazard – that would be difficult to estimate in economic terms.

Despite argument, however, that such extensive measures – "halting state funding for infrastructure in certain areas prone to fire, leaving vacant lots undeveloped and the expansion of more stringent building codes"  -- may be necessary in light of a human-caused disruption of the earth's climate, the proposals are just that.

Insurers, and the people who run those companies and their regulators, have found themselves at the front line of trench-battles that pit their interests, as well as their investors and stakeholders, against those whose business is value-generation.

It's not man versus Mother Nature; rather, it's institutional investors against other institutional investors – with elected regional and state officials in the middle of the fray, forces whose disdain for risk proved out big-time during the last financial debacle, and who seem bent on doing the same this time.

It's not a simple issue. Free enterprise and what's good for people are not in a clearcut battle with partisan tree hugger environmentalists. This challenge involves struggle of the future of organizations whose business prospers or dies based on its ability to assess risk with other organizations whose businesses do well or not based on their ability to secure more land at costs that will support profitable vertical development.

Risk is on, not just in the investment of capital sense.

And make no mistake, California may be one of the first places where the clash of these mega interests have reached a boil, but NYT's Flavelle notes, California often plays a bellwether role in issues like this:

California’s experience could become a model for the rest of the United States, which has staggered through a series of devastating wildfires, hurricanes, floods and other disasters.

We can oversimplify the challenge here, and contend that this "us vs. them" opposition is government overreach.

Or we can reframe the challenge and posit that there's opportunity in solutions to affordable, highly-valued community development that help preserve and restore some of the balances in nature that have gone off kilter to the degree that is still possible.

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John McManus

John McManus

President and Founder

John McManus, founder and president of The Builder’s Daily, is an award-winning editorial, programming, and digital content strategist. TBD's purpose is a community capable of constant improvement.


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