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29.3.07

Election politics driving inferior building code policy options

For readers who have been in a recent coma, yes, it is an election year in Louisiana and, yes, that means a lot of pandering by politicians will go on even if it results in counterproductive policy. One need look no further for such an example as with deliberations made by the Louisiana House’s Commerce Committee.

The panel met recently to consider the implementation of Act 12 of the 2005 First Extraordinary Session, which established a uniform building code statewide. There is at least one outstanding issue of great importance, the extra costs into the thousands of dollars that new construction has to face for inspection to meet the code, and the obvious solution there is to make following the codes voluntary to some degree, where the incentive would be paying more now to have lower insurance rates later.

Another fix would be to vastly increase the number of inspectors, which are far and few between licensed in a monopoly fashion by the International Code Council. If there’s talk of really bringing costs down, this is the place to really start with government providing incentives for individuals to get the training, or, if the sector fails to ramp up quickly and cost efficiently enough, to empower other organizations to provide it and change the law to allow them to inspect. (Presently, the law allows for just an affidavit saying a structure meets code, meaning these high costs can be avoided, but there is talk of getting rid of that provision.)

But instead of these commonsensical solutions, some legislators are going off on tangents that threaten to exacerbate the insurance crisis in Louisiana. In a nutshell, insurance prices are too high in Louisiana because of too much government regulation. Reducing government interference will encourage policy-writers, which will lower prices. (And there’s always a Department of Insurance to oversee them.)

Instead, some politicians like committee chairman Gil Pinac are saying the state should force insurers to give discounts, and others like state Rep. Billy Chandler complain that “It is time for the insurance companies to come up with a plan . . . to give a reduction in high rates.” What Chandler seems to indicate that he doesn’t know is the code went into effect only on Jan. 1 of this year, so there are few if any structures even built under the code that are occupied yet; how can companies make these kinds of decisions with such a vacuum of information?

Even a plan to have government give tax credits to those living in approved structures isn’t optimal. This would take money away from other priorities and involve government in something that the private sector perfectly can properly price by itself.

All of these proposals are impatient responses attributable to a desire to look for fall elections. Instead of thinking clearly on the issue, legislators want to be able to crow during their reelection campaigns that they got people tax credits, or forced rates down, when the sensible, optimal thing to do would be to give the private sector time to fully understand the differing levels of risk and their histories under the new code, to then price things properly. That ability will meet interference by and ultimately produce higher prices from elected officials trying to insert more government into the process.

5 comments:

Dan Garrett said...

I need to correct an apparent misunderstanding of the Affidavit Ordinace as the manner of enforcing the new Uniform Construction Code. The ordinance, currently in use in a number of small rural parishes and municipalities, requires that the builder file an affidavit with the local governing authority that he has complied with the Code, in order to get his certificate of occupancy. Swearing a false affidavit is a misdemenor and filing that false document with the local governing authority is a felony. As such, a builder has a great incentive not to lie. This method of enforcement is a necessary tool for small jurisdictions that do not have the fiscal wherewithal to create a new governmental department and/or do not have a sufficient level of contruction to support an inspection-based code enforcement office with permit fees. The option of contracting with a Third-Party Provider has proved difficult due to their scarcity, which has resulted in some TPP's charge upwards of $2500 for a residential building permit. Of note, in December the legislature did appropriate $8M to assist local governments with code office start-up costs. These grants have been awarded and funds are being transmitted. A number of the Affidavit Ordinance communities will, upon reciept of the funding, switch to inspection-based code enforcement. However, the very small communities still are unable to meet this state mandate, as there is insufficent construction, thus in sufficient permit revenue to sustain an office once it is established. In November of 2005 the legisalture rejected proposals by the Police Jury Association to mandate the State Fire Marshall to provide inspection-based code enforcement in these very small communities. The reason cited by the Fire Marshall's Office - it was too expensive. If inspection-based code enforcement is too expensive for the State to perform, how is a very small parish or municipality supposed to do it? The Police Jury Association of LA has worked dilignetly to assist local governments in meeting this largely unfunded mandate. In fact, our web-site is the most comprehensive source of information on the Code, Code Council, and related matters.

Dan Garrett
General Counsel
Police Jury Association of LA

Anonymous said...

Research the fees a little more. Since January first there have been dramatic fee reductions. It angers me that our "government officials" do not do their research before running their heads. If anyone had done research, fees wouldn't be an issue.

Jeff Sadow said...

I have to tell you, only days before I posted this originally, that an official of a local parish government, one involved in this matter, told me the typical inspector was charging at the time $3 a square foot for an inspection ...

Anonymous said...

Due to "price wars", which happens in every business, prices have went down. CBO's elect to use different fee schedules. One CBO charges a total of $1,000 for plan review and all inspection w/ no milage charge. That is for new construction only. If its a renovation etc. the number of inspection are considered and charged accordingly, accordingly as in under 1,000.Another CBO in the same area averages arounf $1500 for new construction. He does charge milage and such. That parish government sounds like it needs to hire a TPP the has the correct certifications and does not charge 3 dollars a quare foot, which is completely rediculous. That is not a typical inspector. People have not went out and did their OWN research. They are only listening to people who have over-inflated things.

Anonymous said...

Also, please note that the small rural areas can contract a CBO as a TTP at no cost to them. The TTP would act as their Permit Dept. at no cost to that local agency. Also, if their parish has a TTP, they can check to see with the parish or town attorney if they may enter in to a co-op agreement. Also the affidavit process, I guess it's a matter of opinion, and I will just have to agree to disagree, but even if you put aside the fact the in Act 12, it states that a contractor MAY NOT inspect their own work, EVEN if you put that aside, by saying a contractor will not lie just to make a dollar, you must not know very many contractors. A lot of things that need to be inspected for are work that can not be seen after the finished project.
You wouldn't let someone audit their own books would you, even if they signed an affidavit. Maybe the state could even approve of criminals signing affidavits saying they didn't do it. This state needs to move forwards with the rest of the United States, not backward. I'm tired of our state being the butt of way too many jokes.