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The Cost of Not Building to Code

Community leaders face a difficult challenge when they advocate for the adoption of code requirements to increase local construction durability and service life. This article focuses on economic implications of local codes, and their impact on the community.

The Local Code Challenge

The adoption of building codes is an important local decision that typically reflects the community’s view of business investment. Communities that can attract more businesses, tourists, and residents develop a stronger tax base, which can help support improved community services. However, it is not only attracting more businesses, long term retention of quality businesses is essential to sustain consistent community continuity and revenue stream for services. Better services means an even more attractive, robust home and work environment.

Timely adoption of building code standards reflect a community’s desire for best practice in energy conservation, occupant safety, and hazard mitigation. Adopting up-to-date code rarely causes a developer to rethink a development decision.

It’s true some outside property investors may prefer a less aggressive code update cycle. Rather than invest in best building practice, the investor may be more interested in older code and a quicker investment return. In those situations, some community leaders opt to update codes every other code cycle. Elected officials may not fully realize the effect this decision can have on the community. It can put local property at needless risk.

The Stronger Code Advantage

Stronger codes result in lower mitigation and disaster response costs. Researchers at Louisiana State University for example, reported that wind damage costs from Hurricane Katrina would have been reduced by 80 percent if stronger building codes had been in place in New Orleans. Researchers at M.I.T. in Cambridge, Mass. examined the life cycle costs of building codes on a community. They created a probabilistic risk-based method for quantifying lifetime damage costs in residential buildings. Using this analysis, they determined a small increase in initial costs for better construction can yield dramatic savings in damage mitigation over a 50 year building life span.

Avoiding the adoption of better codes can also put a community at odds with federal building guidelines. In the last decade, FEMA has invested millions of dollars in preparing guides for better built communities. In 2015, FEMA published an updated design guide for safe rooms in residential construction. In 2016, a similar guide will be developed for commercial structures.

It’s up to code officials to challenge community leaders to support timely adoption of locally relevant building code, which requires consideration of geology, geography, topography, micro climates, demographics, infrastructure, and community financial and personnel resources along with the risks and consequences of disasters. The fear that developers will pack up and invest elsewhere doesn’t square with the facts. Community leaders should confidently uphold the long-term safety and conservation interests of the community.

Building Code Impact on Local Business

Small businesses drive community growth. Small business owners usually live nearby and have a stake in the community’s economic viability. Strong building codes help safeguard these businesses from extended disruption.

Unfortunately, small businesses are usually tenants in investment properties whose owners may have little or no connection to the community. If weather or fire disaster strikes, the owner may have little incentive to rebuild a damaged or destroyed building, forcing commercial tenants to find an alternate location or go out of business.

Most companies with large volumes of production at a few facilities, by contrast, are more apt to protect their construction investment by buildings at or above-code for their factory, warehouse or production facility. Insurance firms are typically engaged to model the risk of disasters on production or services. Yet another group consists of large businesses with many small business units. These owners tend to have multi-state locations and are probably not aware of local conditions that can affect building performance or resiliency. Unless otherwise required by knowledgeable code officials, they construct to their last project’s design. The loss of a few units in a disaster does not have a significant impact on their bottom line and they tend to relocate after disasters to areas where the demographics are more favorable to the sales of goods and services.

Consider New Orleans’ lower ninth ward. While residents began to return and rebuild, many stores important to daily life did not. Pharmacies, supermarkets, and other small commercial enterprises relocated to more populous, less devastated areas generating a faster ROI. Residential growth in the ninth ward stalled.

Investments in building codes represent good business practices for communities. The Federal Alliance for Safe Homes (FLASH) encourages community leaders to view building codes in the same way as they view their commitment to first responders. Immediately following catastrophic events such as fires, hurricanes, and tornadoes, public works departments are limited on how they can respond. Their first priority is fixing damaged sewers, water, and electrical connections. Codes reduce building damage mitigation demands to enable a community to focus more on reestablishing important basic services.

Stronger Codes, Stronger Communities

Adopting local building codes provides longer, ultimately less costly assurances for a community. Learn what you can do to support the adoption of the latest building code. To get started, ask around. Find out what other area communities have done to improve the property values and long-term future of their community by adopting better building codes.