1
00:00:00,000 --> 00:00:09,000
Welcome to Trust the Process podcast, where we'll pull back the curtain on new home construction, the real estate market, and the trends shaping it all.

2
00:00:09,000 --> 00:00:14,000
Discover the stories, insights, and expertise behind the process of building a new home.

3
00:00:14,000 --> 00:00:19,000
Join us and let's build something great together.

4
00:00:19,000 --> 00:00:30,000
Welcome back to Trust the Process podcast, where we talk about real estate market, new home construction, and everything in between.

5
00:00:30,000 --> 00:00:43,000
Today, as we talk about those in-betweens, we're going to look at codes and regulatory standards that are affecting the build process, both here in Nevada as well as nationally.

6
00:00:43,000 --> 00:00:49,000
We're going to look at the Nevada ones today and kind of talk about that, but we know that it's happening across the entire country.

7
00:00:49,000 --> 00:01:03,000
Everything is changing. Building standards are changing, and the number of codes and regulatory standards that are being put in place, how that affects things, and what that means for us as a builder and for the future of building as a whole.

8
00:01:03,000 --> 00:01:08,000
Yeah, it's, um, boy, what a lead, and we're going to talk about building codes and regulation.

9
00:01:08,000 --> 00:01:14,000
I think I'll say, I think only I could get excited for that episode. I tune in.

10
00:01:14,000 --> 00:01:27,000
So, I, what I, what I wanted to talk about today was on the heels of our last few episodes, which are, have a somewhat of a negative tilt and a negative tone about when it pertains to codes and regulation.

11
00:01:27,000 --> 00:01:35,000
I feel like I might be a little jaded, and even I might lose sight in what codes are for and why we need them.

12
00:01:35,000 --> 00:01:43,000
I read a great quote. I can't remember who it was attributed to, but he said, codes are painted in blood.

13
00:01:43,000 --> 00:01:47,000
Actually, I think the quote is codes and regulations are painted in blood.

14
00:01:47,000 --> 00:02:04,000
It's dark, right? And when you think about why we have regulation and you look at maybe other countries or other eras in history when we had zero regulations and how fast fire swept through houses and how fast cities

15
00:02:04,000 --> 00:02:13,000
burn and how homes could fall into the coastline and how things would just fall over or before streets were regulated.

16
00:02:13,000 --> 00:02:22,000
And air travel was regulated. I don't even think twice to get on a plane because I trust obviously the regulations.

17
00:02:22,000 --> 00:02:30,000
And I think there's an argument without going too far down the rabbit hole that in a true free market, the market would regulate itself, right?

18
00:02:30,000 --> 00:02:36,000
You would be a competitive firm by putting out a quality experience or product.

19
00:02:36,000 --> 00:02:42,000
However, because of barriers to entry to certain industries, you might find industries dominated by one or two players.

20
00:02:42,000 --> 00:02:54,000
Therefore, you need a third party and adult in the room, i.e. government that regulates it for you because I can't go start a jetliner company tomorrow.

21
00:02:54,000 --> 00:02:56,000
Although don't put it past me.

22
00:02:56,000 --> 00:03:01,000
That's true. But I think.

23
00:03:01,000 --> 00:03:03,000
Don't give me any ideas.

24
00:03:03,000 --> 00:03:09,000
But if you look at industries that are controlled by a few players and that's honestly largely every industry.

25
00:03:09,000 --> 00:03:19,000
Look at the automotive industry and how many cars there are versus how few players there are when you really look at, oh, well, Jeep is part of Chrysler, part of Dodge, part of Ramford.

26
00:03:19,000 --> 00:03:29,000
It's Stalantis and you think, well, all those cars fall under that umbrella and everything that Volkswagen controls. And so you think about how few players there are in any industry.

27
00:03:29,000 --> 00:03:39,000
And in our other episode where we talked about how many publicly traded home builders there are just nationwide and how many homes they put out and how much they can corner the market.

28
00:03:39,000 --> 00:03:50,000
One large publicly traded company in our market controls about 20% of new rooftops and I won't name them. But it starts with a D and ends with an R.

29
00:03:50,000 --> 00:03:59,000
And they control about 20% of our market. So yes, the free market should regulate everything.

30
00:03:59,000 --> 00:04:09,000
But that's with the assumption that there's enough choice in the market to allow customers to walk with their to vote with their feet and to say, well, you don't build a sound home.

31
00:04:09,000 --> 00:04:14,000
So I'm going to choose this other home. So I understand the need for regulation.

32
00:04:14,000 --> 00:04:30,000
And I do love the idea that homes are better today than they were 30 or 40 years ago. And I appreciate the energy that leaps and bounds we've made with energy efficiency and how much more earthquake resistant, fire resistant, weather resistant,

33
00:04:30,000 --> 00:04:47,000
age resistant, our structures are today versus even 40 years, 30 years in the past, let alone 100 years in the past, where the adage of they don't build them like they used to, which makes my hair in the back of my next stand up because tar apart at home built from 1955.

34
00:04:47,000 --> 00:04:50,000
That thing is built out of cardboard and paper.

35
00:04:50,000 --> 00:04:51,000
That is not great.

36
00:04:51,000 --> 00:04:52,000
So they're not grateful.

37
00:04:52,000 --> 00:04:53,000
They're not grateful.

38
00:04:53,000 --> 00:04:58,000
They're not built like that. You could punch a hole in the siding and your fist would go through into the bedroom.

39
00:04:58,000 --> 00:05:04,000
Sometimes they didn't even have insulation. So we're looking at the other extreme of it.

40
00:05:04,000 --> 00:05:16,000
I understand and I have to take a step back and breathe as to give as to give myself context in terms of why we have these regulations.

41
00:05:16,000 --> 00:05:35,000
And you can't you can't count on the free market to iron all those hiccups out, take a trip to a third world country and get in a 1984 Sentra that is your Uber driver and drive through those streets and alleyways that are not regulated.

42
00:05:35,000 --> 00:05:41,000
Some are seven feet wide and some are 70 feet wide and the structures that are built over top of each other with the laundry hanging out.

43
00:05:41,000 --> 00:05:47,000
And you think, well, I don't want zero regulation because this is what it looks like.

44
00:05:47,000 --> 00:05:55,000
And just a standardized right. There's a just to know that there is a general safety component that's been considered before that's right.

45
00:05:55,000 --> 00:05:59,000
That's right. It does give you a great sense of comfort to know that.

46
00:05:59,000 --> 00:06:14,000
So while we're doing it temper while we're dealing with the temporary pain of building the structure, which is a nine to 18 month process, we have to think that structure is going to be there for 100 to 200 to 300 years.

47
00:06:14,000 --> 00:06:18,000
We don't know. And there's homes in England that are 500 and 600 years old.

48
00:06:18,000 --> 00:06:34,000
So I understand why and I want to, I wanted to give our viewers that context that I'm not anti regulation. I love the idea that we have better building standards today than we did even 2025 years ago.

49
00:06:34,000 --> 00:06:39,000
So that being said, I want to trash the codes for a while.

50
00:06:39,000 --> 00:06:45,000
I think that no, I think that's a good point to make though. I mean, it isn't an anti regulation. It's a hurdle crossing.

51
00:06:45,000 --> 00:06:55,000
It is. And I think what gets what does get a little frustrating is that there's never a push to cut any regulations at all. That is so unpopular.

52
00:06:55,000 --> 00:07:04,000
And there's really no will in the regulatory agencies because by doing that they're shrinking their footprint.

53
00:07:04,000 --> 00:07:15,000
So the Department of Building and Safety wants robust codes. It's job security. And most home building permits are minimum of $5,000.

54
00:07:15,000 --> 00:07:20,000
Not really could go up to 12, 15, 18, $20,000.

55
00:07:20,000 --> 00:07:32,000
And you look at a municipality like Clark County, now it's broken up. Sometimes the city, Henderson gets that permit fee or you know, there's always, county always collects a certain impact fee, but there's always something collected on every rooftop.

56
00:07:32,000 --> 00:07:40,000
And we know that last year we built around 12,500 rooftops by 10,000.

57
00:07:40,000 --> 00:07:46,000
And my math doesn't even go. My mind doesn't work in numbers that commas that long.

58
00:07:46,000 --> 00:07:54,000
So I think that we have to remember that there are some perverse motives that people don't want to see regulations.

59
00:07:54,000 --> 00:08:07,000
And if any regulations roll back in fact, they have a vested interest in increasing regulations and I feel that certain agencies locally might exist for that purpose.

60
00:08:07,000 --> 00:08:16,000
And you might see them growing for the sake of growth. So I thought of something last week that I found exceptionally clever, but you might not.

61
00:08:16,000 --> 00:08:18,000
I just said well.

62
00:08:18,000 --> 00:08:28,000
Regulations, i.e. building codes in our industry is kind of like a garden. And once you plant it, the garden just keeps growing and germinating a bigger garden.

63
00:08:28,000 --> 00:08:38,000
Right. And of course, it wants to grow bigger. It's just naturally plants and weeds want to grow. It's not all crop. It's just growth.

64
00:08:38,000 --> 00:08:43,000
So if you have a garden and you're watering it, it'll grow. It might not be the stuff you want.

65
00:08:43,000 --> 00:08:54,000
So you could make a case for that garden and say it's choked out by the weeds and that's kind of how I feel that many times when I'm scratching my head or beating my head against the wall, quite frankly.

66
00:08:54,000 --> 00:09:04,000
I wish I was only scratching it. It's not. It's a lot of that. It feels like regulation and regulation for regulation's sake.

67
00:09:04,000 --> 00:09:14,000
And I think that that's where my biggest frustrations come from because I believe in the spirit of regulations and I believe in the spirit of building codes.

68
00:09:14,000 --> 00:09:29,000
But I did a little exercise on our local Clark County building codes and what is referenced on a general set of stamped blueprints that I submit to the city.

69
00:09:29,000 --> 00:09:44,000
And without boring our readers, I'm going to borrow them. 2021 International Building Code, 2018 Universal Mechanical Code, 2018 International Energy Efficiency Code, 2018 International Residential Code,

70
00:09:44,000 --> 00:10:05,000
2018 Uniform Plumbing Code, 2021 International Wildland Urban Interface Code, 2020, we'll talk about that, 2021 International Fire Code, 2017 National Electric Code, and the 2009 ICC, which is kind of an accessibility, how structures are accessible to the population.

71
00:10:05,000 --> 00:10:21,000
And all have to be referenced on a set of plans that we've reviewed these plans to these codes. Then I did a little exercise if our audience is still awake as to how many pages those codes encompass total.

72
00:10:21,000 --> 00:10:28,000
Okay. If you had to just guess all those codes, how many pages, if we printed them out, how many pages would all those codes take up?

73
00:10:28,000 --> 00:10:42,000
How many reams of paper? Yeah, I'd say probably 500 pages. I mean, if you're thinking it would sum up to you libertarian, there is no way in hell it's only 500 pages.

74
00:10:42,000 --> 00:11:05,000
There is no way. It is 4,912,000 pages of code, 4,912 pages of code. That's pages of code. If you printed out all the codes that I just mentioned, mind you, those are the codes in their entirety.

75
00:11:05,000 --> 00:11:15,000
All of our codes have a parentheses that says with local amendments. So 2021 International Building Code with local amendments.

76
00:11:15,000 --> 00:11:28,000
So that's saying, yes, all of these codes, we're also going to amend it to our codes that pertain to this. So the uniform plumbing code is something that is observed nationwide.

77
00:11:28,000 --> 00:11:43,000
But then Clark County, our local jurisdictions, your local jurisdictions are going to have additional overlays and amendments on top of that. I would imagine that's another 3,400 pages were over 5,000 pages of code.

78
00:11:43,000 --> 00:11:47,000
I thought I was thinking big when I said five. I was like, gosh, there's so many.

79
00:11:47,000 --> 00:12:06,000
If I didn't have this when we were talking in our previous episodes, I would have thought it was on the order of three to 700 pages worth of code. And I just didn't really put my head around it until I pulled up a set of blueprints and found that all of these code books are referenced.

80
00:12:06,000 --> 00:12:23,000
And it's nine, by the way, it's nine code books. And I thought, wait a minute, if it's nine books of code, how many pages of code is that? And that's how we come up with, I mean, for instance, the International Building Code is 832 pages.

81
00:12:23,000 --> 00:12:36,000
The International Wildland Urban Interface Code, which is a code for when properties are built. Yeah, it's a face only regulator, could love.

82
00:12:36,000 --> 00:12:55,000
That code is for basically growth impeding into nature. And it's 78 pages on codes related to your building this subdivision. And on the other side of it is nature, desert, forest, whatever, nothingness, whatever it is.

83
00:12:55,000 --> 00:13:00,000
And there are 78 pages of code for that. And certain things that you need to address.

84
00:13:00,000 --> 00:13:09,000
So it is bloated to say the least. So although I believe in the spirit of the codes, and I know that we need to be a well regulated industry.

85
00:13:09,000 --> 00:13:18,000
After all, people live in these structures, these structures are meant to be here. It's not a coffee mug. This coffee mug, if it's inconsequential, right?

86
00:13:18,000 --> 00:13:24,000
If the coffee mug fails, terrible, throw it away, get a different one. It's not meant to last 100 years.

87
00:13:24,000 --> 00:13:32,000
And they're also major investments. And their insurance liabilities, right? Every home that's built needs to be insured.

88
00:13:32,000 --> 00:13:44,000
So when you think of it under that context, is this growth in codes part of what has helped our real estate become such a bulletproof asset?

89
00:13:44,000 --> 00:13:54,000
Because it's presumed that when they're built to 4,900 pages of code, that they are going to be here for a while and that that investment is safe.

90
00:13:54,000 --> 00:14:02,000
Is that part of why we've seen homes go from a place to live to an asset class in really two generations?

91
00:14:02,000 --> 00:14:09,000
They were not an asset class. A home was worth what it could be either lived in for or rented for.

92
00:14:09,000 --> 00:14:16,000
It was never considered a speculative investment until probably maybe the 70s, right?

93
00:14:16,000 --> 00:14:24,000
The idea of a landlord being anything more than, oh, my grandmother left me this home in her will and now I rent it to a tenant.

94
00:14:24,000 --> 00:14:29,000
And it's worth the $500 a month that I get from that tenant. That's what it's worth to me.

95
00:14:29,000 --> 00:14:33,000
And then it's worth to someone else what it saves them in rents and housing policy.

96
00:14:33,000 --> 00:14:41,000
It became something that was a utilitarian good to something that became a wealth creation juggernaut, honestly.

97
00:14:41,000 --> 00:14:52,000
And I just wonder if, and that's why I wanted to be introspective and fair to say, is it part of why there's such wonderful wealth generating machines?

98
00:14:52,000 --> 00:15:01,000
Is because when insurance companies see 4,900 pages of code, they know, OK, well, this home, and that's when you look at insurance rates.

99
00:15:01,000 --> 00:15:09,000
One of the single greatest factors for dictating insurance rates is the age of the structure, not the size, not the location.

100
00:15:09,000 --> 00:15:18,000
It's the age of the structure. It's just presumed that there's less neglect, but also that they were built to 4900 pages of code.

101
00:15:18,000 --> 00:15:21,000
Different standards, great way to sum it up succinctly.

102
00:15:21,000 --> 00:15:28,000
So I think that when I look at it through that lens, I try to be a little fair to say, yes, it is frustrating.

103
00:15:28,000 --> 00:15:34,000
Do I think we could cut 4,900 pages of code down to, I don't know, 4,800 pages of code?

104
00:15:34,000 --> 00:15:36,000
I'd settle for that, maybe.

105
00:15:36,000 --> 00:15:38,000
And I think it's only growing.

106
00:15:38,000 --> 00:15:47,000
That's what worries me is that I remember building to 2014 International Residential Code in 2018.

107
00:15:47,000 --> 00:15:53,000
And last I heard, we're going to start adopting 2021 International Residential Code.

108
00:15:53,000 --> 00:15:56,000
And then there's other things that best laid plans, right?

109
00:15:56,000 --> 00:16:03,000
So there's a push for energy efficiency, and it's very important, completely understand it.

110
00:16:03,000 --> 00:16:05,000
Do I wish the free market handled that more?

111
00:16:05,000 --> 00:16:09,000
Do I wish that the free market valued energy efficient homes and then would pay accordingly?

112
00:16:09,000 --> 00:16:12,000
We didn't have to legislate energy efficiency into homes.

113
00:16:12,000 --> 00:16:13,000
Yes.

114
00:16:13,000 --> 00:16:17,000
Is that a luxury a lot of home buyers might have when their budget constrained?

115
00:16:17,000 --> 00:16:21,000
Probably no, but the buyer's in the pain for it anyway.

116
00:16:21,000 --> 00:16:25,000
And if you look at a lot of the regulations from 2010 onward.

117
00:16:25,000 --> 00:16:29,000
So a lot of the low hanging fruit needed to be addressed.

118
00:16:29,000 --> 00:16:35,000
Certain R values in the ceiling and just insulation in general, window R value, things like that.

119
00:16:35,000 --> 00:16:37,000
That all matters, and it does.

120
00:16:37,000 --> 00:16:45,000
However, if you look at new regulations, because they're never going to pull back environmental and energy efficiency regulations, they only add to them.

121
00:16:45,000 --> 00:16:55,000
Since 2010, those, the new regulations on the books, I can't remember which think tank did a study on it and it's worth the researcher that did it.

122
00:16:55,000 --> 00:16:59,000
So I hold it with, you know, you never, you can pick these things apart.

123
00:16:59,000 --> 00:17:12,000
But it's estimated that new energy efficiency pushes are about 86 years worth of time to recoup the added cost of those initiatives.

124
00:17:12,000 --> 00:17:17,000
So it's definitely a thought that that's why I said best laid plans.

125
00:17:17,000 --> 00:17:20,000
The intentions are there and I get it.

126
00:17:20,000 --> 00:17:27,000
But when you look at it overall cost, what is the functional lifespan of a home before it would have a substantial renovation anyway?

127
00:17:27,000 --> 00:17:31,000
Taste change, functionality changes, zoning changes.

128
00:17:31,000 --> 00:17:32,000
Now it's allowed.

129
00:17:32,000 --> 00:17:35,000
You can do two family home there and tear it down and put it to families.

130
00:17:35,000 --> 00:17:44,000
So things change and is that beyond the average lifespan even of a home before you have gotten back to zero on that energy investment.

131
00:17:44,000 --> 00:17:48,000
So there's definitely an argument on both sides for it.

132
00:17:48,000 --> 00:18:01,000
And when we're in an affordability crunch, yes, it feels a little counterintuitive to keep increasing to say why is a home built to 2018 standards no longer relevant?

133
00:18:01,000 --> 00:18:04,000
Do we really think we've come that far in technology?

134
00:18:04,000 --> 00:18:07,000
What has changed that cost that's associated with each of those?

135
00:18:07,000 --> 00:18:13,000
So while we're not building homes like we were, they're also not the same cost that they were for that building standard.

136
00:18:13,000 --> 00:18:14,000
Exactly.

137
00:18:14,000 --> 00:18:20,000
Because we're now having to meet because each new code assesses another X number of...

138
00:18:20,000 --> 00:18:21,000
There's a multi on it.

139
00:18:21,000 --> 00:18:26,000
Or it's a different product type or it's a different engineer that has to look at it or whatever it is.

140
00:18:26,000 --> 00:18:27,000
Of course.

141
00:18:27,000 --> 00:18:29,000
Another set of cost slows it down.

142
00:18:29,000 --> 00:18:31,000
Even if nothing else, it just slows it down and adds more.

143
00:18:31,000 --> 00:18:36,000
And at the end of the day, that home is going to cost more to put out to the market because it costs you more to build.

144
00:18:36,000 --> 00:18:41,000
And so are we going to go further from bridging our affordability?

145
00:18:41,000 --> 00:18:43,000
The short answer is yes.

146
00:18:43,000 --> 00:18:46,000
I mean, you can only change two things, right?

147
00:18:46,000 --> 00:18:50,000
Your inputs and your throughputs to get to the same output.

148
00:18:50,000 --> 00:18:56,000
So if your inputs are higher, eventually the market will see you say, well, it doesn't.

149
00:18:56,000 --> 00:19:04,000
Great example, in 2020, it became mandatory in the entire county to have fire suppression, active fire suppression.

150
00:19:04,000 --> 00:19:10,000
So fire sprinklers, whereas it was a Henderson only, which is one of our suburbs, a Henderson only jurisdiction.

151
00:19:10,000 --> 00:19:12,000
That jurisdiction was the only one that required sprinklers.

152
00:19:12,000 --> 00:19:19,000
And then all of Las Vegas and Clark County, which represents probably 75% of the Las Vegas metro population.

153
00:19:19,000 --> 00:19:21,000
So this was a new thing for us.

154
00:19:21,000 --> 00:19:36,000
And it added about 12 to $22,000 worth of cost, hard construction costs for me, hard construction costs to the cost of every single house, even a entry level home, 10% below the median sales price.

155
00:19:36,000 --> 00:19:41,000
It added that to that home because there's a certain just to do fire suppression is $10,000.

156
00:19:41,000 --> 00:19:45,000
And then the size of the home starts to factor in, but just doing it is $10,000.

157
00:19:45,000 --> 00:19:54,000
And then it costs more, you know, as it goes up in terms of square footage and how much suppression you're installing, but there's a certain kind of action potential.

158
00:19:54,000 --> 00:20:00,000
So every home, yes, the entire time we're home, every new permit from 2021 onward.

159
00:20:00,000 --> 00:20:07,000
So when you look at that, yes, it did automatically mean that homes became $15,000 more valuable.

160
00:20:07,000 --> 00:20:18,000
No, but what it does is put supply constraints into the marketplace and then the market adapts quickly and says, so builders like myself, just you add it right on to the price.

161
00:20:18,000 --> 00:20:22,000
The first people to feel it are new construction buyers because the bill is just going to say, you know what it is.

162
00:20:22,000 --> 00:20:25,000
I was already going to get 1,750,000.

163
00:20:25,000 --> 00:20:28,000
I'll get 1,765,000 and someone will still pay it.

164
00:20:28,000 --> 00:20:31,000
And it puts that upward pressure on prices.

165
00:20:31,000 --> 00:20:32,000
That's one example.

166
00:20:32,000 --> 00:20:35,000
So if you think about what that looks like.

167
00:20:35,000 --> 00:20:38,000
And that you're using a million dollar home as the.

168
00:20:38,000 --> 00:20:39,000
That's right.

169
00:20:39,000 --> 00:20:40,000
As a percentage of that.

170
00:20:40,000 --> 00:20:46,000
Let's take that back to the percentage of 375 versus 390 or the $400,000 entry level home.

171
00:20:46,000 --> 00:20:48,000
What, that's a huge margin.

172
00:20:48,000 --> 00:20:50,000
Now you're the same number to that greater percentage.

173
00:20:50,000 --> 00:20:54,000
And again, that buyer is who.

174
00:20:54,000 --> 00:20:55,000
That's right.

175
00:20:55,000 --> 00:20:56,000
And it's best laid plans.

176
00:20:56,000 --> 00:20:58,000
The intentions are pure.

177
00:20:58,000 --> 00:21:00,000
They, who wants to lose their home in a fire?

178
00:21:00,000 --> 00:21:02,000
Nobody wants to lose their home in a fire.

179
00:21:02,000 --> 00:21:04,000
And then there's an insurance piece that.

180
00:21:04,000 --> 00:21:05,000
That's right.

181
00:21:05,000 --> 00:21:07,000
That there's a savings that comes with insurance.

182
00:21:07,000 --> 00:21:08,000
So now is, does it come up?

183
00:21:08,000 --> 00:21:12,000
However, if you talk to actuarial or actuaries and insurance companies,

184
00:21:12,000 --> 00:21:16,000
they see it as a net zero most that I've talked to.

185
00:21:16,000 --> 00:21:22,000
Because now you have all this running water in your ceilings and water loss is a bigger

186
00:21:22,000 --> 00:21:24,000
loss leader for insurance companies in fire.

187
00:21:24,000 --> 00:21:29,000
So it's actually about a zero, like a zero to zero some game here.

188
00:21:29,000 --> 00:21:32,000
So as using that as an example, just to, it's to me,

189
00:21:32,000 --> 00:21:35,000
that's just a great relatable example.

190
00:21:35,000 --> 00:21:42,000
And when you look at that times 4900 pages of code, you can imagine why it's challenging.

191
00:21:42,000 --> 00:21:44,000
So I get it.

192
00:21:44,000 --> 00:21:46,000
And I understand we need codes.

193
00:21:46,000 --> 00:21:49,000
Our first building codes, I have to sprinkle in a little bit of history.

194
00:21:49,000 --> 00:21:50,000
Okay.

195
00:21:50,000 --> 00:21:53,000
About 1700 BC, Hammurabi's code.

196
00:21:53,000 --> 00:21:55,000
17, I didn't think we'd be supposed to.

197
00:21:55,000 --> 00:21:57,000
We're just going farther and farther back in time.

198
00:21:57,000 --> 00:22:05,000
There were codes for construction standards and the penalty for building a home that was

199
00:22:05,000 --> 00:22:08,000
substandard and collapsed or killed someone was death.

200
00:22:08,000 --> 00:22:11,000
So thankfully, I feel over.

201
00:22:11,000 --> 00:22:15,000
I think we've regulated, but I don't think I'm as regulated as a trust home builders,

202
00:22:15,000 --> 00:22:17,000
Hammurabi stuff.

203
00:22:17,000 --> 00:22:18,000
Yeah.

204
00:22:18,000 --> 00:22:19,000
So I understand.

205
00:22:19,000 --> 00:22:24,000
And I just feel like there's, can we, can we thin, can we thin it down a little bit?

206
00:22:24,000 --> 00:22:29,000
And get some of these off the books or send them a little bit.

207
00:22:29,000 --> 00:22:31,000
Literally, the weeds start choking out the,

208
00:22:31,000 --> 00:22:34,000
The weeds start choking out the garden because you've made this fertile soil.

209
00:22:34,000 --> 00:22:37,000
So that one regulation breeds two, two, four.

210
00:22:37,000 --> 00:22:38,000
It is just they kind of,

211
00:22:38,000 --> 00:22:42,000
Are they just regulations for the sake of regulation or how they really move the needle in terms of the,

212
00:22:42,000 --> 00:22:44,000
the end quality of the home that's being built?

213
00:22:44,000 --> 00:22:45,000
Exactly.

214
00:22:45,000 --> 00:22:47,000
And how much of that would have been market driven anyway?

215
00:22:47,000 --> 00:22:50,000
So that's kind of the balance, right?

216
00:22:50,000 --> 00:22:54,000
Maybe people would have paid more for spring homes with sprinklers.

217
00:22:54,000 --> 00:22:57,000
And what kills me is that we have all this housing stock.

218
00:22:57,000 --> 00:23:02,000
Las Vegas is a relatively new market when you think about most of our growth has been since 19,

219
00:23:02,000 --> 00:23:03,000
Right.

220
00:23:03,000 --> 00:23:07,000
So a lot of our housing inventory here is under 30 years old.

221
00:23:07,000 --> 00:23:09,000
And you look at the standard of a 1995,

222
00:23:09,000 --> 00:23:10,000
The home to 2025,

223
00:23:10,000 --> 00:23:12,000
The home while the different,

224
00:23:12,000 --> 00:23:18,000
But we have all this housing inventory and housing stock that is inferior in the eyes of these codes.

225
00:23:18,000 --> 00:23:19,000
I mean, technically, right?

226
00:23:19,000 --> 00:23:23,000
So why is it okay for this is two or 2.3 million people here?

227
00:23:23,000 --> 00:23:27,000
Why is it okay for 2 million people to live in this squalor?

228
00:23:27,000 --> 00:23:28,000
Right.

229
00:23:28,000 --> 00:23:29,000
Right.

230
00:23:29,000 --> 00:23:32,000
You mean you don't have our 19 and you're come on,

231
00:23:32,000 --> 00:23:33,000
How do you even get up on?

232
00:23:33,000 --> 00:23:35,000
How do you get out of bed?

233
00:23:35,000 --> 00:23:37,000
So there's just a lot of,

234
00:23:37,000 --> 00:23:44,000
A lot of that pondering that I do to think how much of the free market have taken care of and how much are we worsening the housing?

235
00:23:44,000 --> 00:23:49,000
Yeah. And we haven't even talked talked about zoning codes and land use codes.

236
00:23:49,000 --> 00:23:58,000
And that's something that I have a really hard time reconciling when you have old outdated zoning laws that favor suburbia that favor big cul-de-sac set.

237
00:23:58,000 --> 00:24:04,000
Let kind of the market decide what the market wants instead of the city over regulating it.

238
00:24:04,000 --> 00:24:05,000
And we'll talk about that.

239
00:24:05,000 --> 00:24:07,000
And maybe in our land podcast,

240
00:24:07,000 --> 00:24:08,000
In our land episode,

241
00:24:08,000 --> 00:24:12,000
But there's these are just Department of Building and safety codes.

242
00:24:12,000 --> 00:24:15,000
This is not the amount of codes,

243
00:24:15,000 --> 00:24:19,000
Conclusive list of codes that exist in our town.

244
00:24:19,000 --> 00:24:23,000
This is just for new residential construction.

245
00:24:23,000 --> 00:24:25,000
There's no ADA codes in here.

246
00:24:25,000 --> 00:24:27,000
Nothing for commercial, right?

247
00:24:27,000 --> 00:24:29,000
Because these are residential only structures.

248
00:24:29,000 --> 00:24:33,000
So there's a ton of codes and there's a ton of land use codes.

249
00:24:33,000 --> 00:24:39,000
We have something odd in Henderson and our Henderson suburb of a hillside overlay.

250
00:24:39,000 --> 00:24:43,000
So if a certain percentage of your parcel is subject to the hillside,

251
00:24:43,000 --> 00:24:50,000
Then you have to do 3D maps and renderings and you have to say how many desert scorpions are going to be displaced.

252
00:24:50,000 --> 00:24:53,000
You have to do an environmental study and you have to say,

253
00:24:53,000 --> 00:24:56,000
Oh, this is I'm clearing off 18 dead sagebrushes.

254
00:24:56,000 --> 00:24:59,000
That's the environmental impact of it's a lot.

255
00:24:59,000 --> 00:25:05,000
It adds another 50,000 and six months worth of work to an average parcel and average five acre subdivision.

256
00:25:05,000 --> 00:25:08,000
So there's a lot of and that's another set of codes.

257
00:25:08,000 --> 00:25:10,000
So it's a lot.

258
00:25:10,000 --> 00:25:14,000
It's challenging to navigate through, but we do it.

259
00:25:14,000 --> 00:25:15,000
I'm looking at it from that.

260
00:25:15,000 --> 00:25:19,000
I mean, I'm thinking about that, that specific example.

261
00:25:19,000 --> 00:25:21,000
These are gr...

262
00:25:21,000 --> 00:25:25,000
It's, if you think about it, without getting them a soapbox,

263
00:25:25,000 --> 00:25:31,000
The types of people who are writing these codes are generally not business minded people.

264
00:25:31,000 --> 00:25:35,000
So they might be looking at it from a very limited lens.

265
00:25:35,000 --> 00:25:37,000
They're not economists.

266
00:25:37,000 --> 00:25:38,000
They're looking at it.

267
00:25:38,000 --> 00:25:39,000
Someone gets in their ear and says,

268
00:25:39,000 --> 00:25:43,000
Henderson has some beautiful hillsides and some beautiful mountain ranges.

269
00:25:43,000 --> 00:25:48,000
And we need to ensure that we develop those properly.

270
00:25:48,000 --> 00:25:50,000
And again, best laid plans.

271
00:25:50,000 --> 00:25:52,000
Of course, we want to keep the city desirable,

272
00:25:52,000 --> 00:25:57,000
but maybe let the market determine that instead of legislating it.

273
00:25:57,000 --> 00:26:03,000
So something like that was just a person got in the air of a lawmaker and it was,

274
00:26:03,000 --> 00:26:04,000
You know what?

275
00:26:04,000 --> 00:26:05,000
That's a really good idea.

276
00:26:05,000 --> 00:26:07,000
I think we should do that.

277
00:26:07,000 --> 00:26:09,000
We don't want unfettered development of our hillsides.

278
00:26:09,000 --> 00:26:12,000
I mean, if you drive 15 minutes outside the city,

279
00:26:12,000 --> 00:26:14,000
you'll see all the mountains and hillsides you want.

280
00:26:14,000 --> 00:26:16,000
We need them in Henderson.

281
00:26:16,000 --> 00:26:19,000
But, and I do understand, I completely understand development standards.

282
00:26:19,000 --> 00:26:22,000
When you're talking about the other codes, again,

283
00:26:22,000 --> 00:26:24,000
I think it's the intentions are there.

284
00:26:24,000 --> 00:26:27,000
It is not the city's job in their mind.

285
00:26:27,000 --> 00:26:32,000
It's not their mission statement to make the city marketable,

286
00:26:32,000 --> 00:26:34,000
to make building pencil out.

287
00:26:34,000 --> 00:26:40,000
Their job is to preserve the life of their citizenry and to protect their safety.

288
00:26:40,000 --> 00:26:44,000
And another kind of interesting thought,

289
00:26:44,000 --> 00:26:46,000
and this is way down the rabbit hole,

290
00:26:46,000 --> 00:26:50,000
but the city kind of owns your property too.

291
00:26:50,000 --> 00:26:52,000
You're basically in business with your city.

292
00:26:52,000 --> 00:26:54,000
And if you don't think that,

293
00:26:54,000 --> 00:26:58,000
just stop paying your property taxes for a while and that house becomes theirs.

294
00:26:58,000 --> 00:27:03,000
So really every home that's built, the city might see as their home.

295
00:27:03,000 --> 00:27:06,000
They might have a vested interest in that home as well.

296
00:27:06,000 --> 00:27:07,000
It's their tax base.

297
00:27:07,000 --> 00:27:10,000
So they might own that house one day if you're not careful,

298
00:27:10,000 --> 00:27:13,000
if you don't have your taxes set up on auto pay.

299
00:27:13,000 --> 00:27:16,000
So that's, I don't know if that's where their minds are at,

300
00:27:16,000 --> 00:27:21,000
but I do feel like that potentially was where it started to say,

301
00:27:21,000 --> 00:27:23,000
we need regulation, we need standardization.

302
00:27:23,000 --> 00:27:28,000
We're tired of deploying our entire fire crew because someone was running a business

303
00:27:28,000 --> 00:27:30,000
in the second floor of their house.

304
00:27:30,000 --> 00:27:31,000
Okay, now we need a zoning code.

305
00:27:31,000 --> 00:27:32,000
Okay, you can't do that here.

306
00:27:32,000 --> 00:27:36,000
Oh, they had all these combustible materials and there were no fire escapes

307
00:27:36,000 --> 00:27:41,000
and people died and kids, you know, fire crews couldn't get in there

308
00:27:41,000 --> 00:27:43,000
and the floor collapsed.

309
00:27:43,000 --> 00:27:46,000
And I mean, how many of those do I say regulations and codes are painted

310
00:27:46,000 --> 00:27:48,000
and are written in blood?

311
00:27:48,000 --> 00:27:50,000
You can see again, the intentions are pure,

312
00:27:50,000 --> 00:27:54,000
but regulations tend to breed regulations and codes tend to breed codes.

313
00:27:54,000 --> 00:27:59,000
So I feel like that's where we let, we opened up Pandora's box.

314
00:27:59,000 --> 00:28:00,000
So what is it?

315
00:28:00,000 --> 00:28:01,000
Is a sweet spot?

316
00:28:01,000 --> 00:28:02,000
Is it a happy medium?

317
00:28:02,000 --> 00:28:08,000
Obviously, do I want to go to a model of pure free market and you can build anything anywhere?

318
00:28:08,000 --> 00:28:09,000
And do I want to live in a city like that?

319
00:28:09,000 --> 00:28:10,000
Do you want to live in a city like that?

320
00:28:10,000 --> 00:28:13,000
Probably not, but do you want to live in a place where it takes three years

321
00:28:13,000 --> 00:28:17,000
to get a home approved or where there's a stack of codes this thick

322
00:28:17,000 --> 00:28:22,000
just because 500 feet of your five acre parcel might have a slope greater than 25%

323
00:28:22,000 --> 00:28:24,000
and that's hillside?

324
00:28:24,000 --> 00:28:25,000
Probably not either.

325
00:28:25,000 --> 00:28:29,000
So I think it's just like everything, it's common sense reform.

326
00:28:29,000 --> 00:28:36,000
And we had a massive lawsuit with the city of Las Vegas that it's about a half a billion dollar settlement

327
00:28:36,000 --> 00:28:40,000
for one of our golf courses that went belly up and was sold to a developer.

328
00:28:40,000 --> 00:28:46,000
And the city, as the judgment said, deprived him of his use to develop that

329
00:28:46,000 --> 00:28:50,000
and his enjoyment to develop that parcel by putting these roadblocks in

330
00:28:50,000 --> 00:28:55,000
to prohibit the development starting back from 2008, I believe.

331
00:28:55,000 --> 00:28:59,000
And the settlement just came down the line in 2024, so we're talking,

332
00:28:59,000 --> 00:29:03,000
it was a, what is it, 16 years worth of litigation going back and forth.

333
00:29:03,000 --> 00:29:09,000
So that's some of the most egregious examples that might maybe wake up the city to say,

334
00:29:09,000 --> 00:29:12,000
look, we have to find a happy medium here.

335
00:29:12,000 --> 00:29:13,000
We are a growing city.

336
00:29:13,000 --> 00:29:14,000
We're a desirable city.

337
00:29:14,000 --> 00:29:20,000
And ultimately people deserve peaceful enjoyment of their property and that includes improving it

338
00:29:20,000 --> 00:29:25,000
and making it better and putting it into the city itself.

339
00:29:25,000 --> 00:29:28,000
Otherwise we're a city of just raw land and then we're not a city.

340
00:29:28,000 --> 00:29:30,000
So it's interesting.

341
00:29:30,000 --> 00:29:32,000
It's kind of a fine line to walk.

342
00:29:32,000 --> 00:29:37,000
We want the safety and the, you know, we want the standardization and the right.

343
00:29:37,000 --> 00:29:38,000
Safety, the standards, right.

344
00:29:38,000 --> 00:29:39,000
All of that that would come from.

345
00:29:39,000 --> 00:29:41,000
We want to live in a beautiful city.

346
00:29:41,000 --> 00:29:43,000
That's such a hindrance to some of those.

347
00:29:43,000 --> 00:29:44,000
It is. Yeah.

348
00:29:44,000 --> 00:29:46,000
It is. It's challenging.

349
00:29:46,000 --> 00:29:52,000
So I, again, again, I do full wholeheartedly believe that regulators and wall makers have

350
00:29:52,000 --> 00:29:54,000
good intentions when it comes to building codes.

351
00:29:54,000 --> 00:29:59,000
I don't think that there's any nefarious cause it's really hard to track who benefits from it.

352
00:29:59,000 --> 00:30:01,000
It's just that they're not wired that way.

353
00:30:01,000 --> 00:30:03,000
Right. They do. Right.

354
00:30:03,000 --> 00:30:07,000
But, but are there some, are there things that don't make sense anymore?

355
00:30:07,000 --> 00:30:08,000
Right. Exactly.

356
00:30:08,000 --> 00:30:10,000
That maybe the fair market would, would bear out.

357
00:30:10,000 --> 00:30:12,000
So I find it interesting. Yeah.

358
00:30:12,000 --> 00:30:15,000
It's interesting conversation and things that I haven't considered.

359
00:30:15,000 --> 00:30:18,000
I do know that the codes are growing. I do know how nefarious those can be.

360
00:30:18,000 --> 00:30:22,000
I do know that they're all in place and challenges for a lot of things,

361
00:30:22,000 --> 00:30:26,000
but hadn't really considered the, the big play on all of that.

362
00:30:26,000 --> 00:30:30,000
And when you look at those two things as the, the two sides of the coin,

363
00:30:30,000 --> 00:30:33,000
you know, the regulations and, and try to be fair.

364
00:30:33,000 --> 00:30:39,000
Let's just try to be fair to say, okay, well, I can belly ache all day long about 5,000 pages of code,

365
00:30:39,000 --> 00:30:42,000
but what are, what's their perspective?

366
00:30:42,000 --> 00:30:44,000
Play the, play, play the devil's advocate.

367
00:30:44,000 --> 00:30:46,000
God knows they don't play devil's advocate for me,

368
00:30:46,000 --> 00:30:48,000
but I'll play devil's advocate for that.

369
00:30:48,000 --> 00:30:52,000
So it is interesting and it's something that I ponder a lot at night, you know,

370
00:30:52,000 --> 00:30:57,000
before when, when everything gets quiet, you think I am building their city.

371
00:30:57,000 --> 00:30:59,000
Cause cities don't do much building.

372
00:30:59,000 --> 00:31:01,000
They don't do much in the way of building, right?

373
00:31:01,000 --> 00:31:06,000
They might build some of the municipal buildings, but for the most part cities are built by private enterprise.

374
00:31:06,000 --> 00:31:08,000
Cities are built by developers.

375
00:31:08,000 --> 00:31:10,000
Cities are built by people improving on their own land.

376
00:31:10,000 --> 00:31:11,000
We are the city.

377
00:31:11,000 --> 00:31:16,000
And it's interesting that sometimes the city is your biggest enemy.

378
00:31:16,000 --> 00:31:17,000
So great.

379
00:31:17,000 --> 00:31:18,000
So great.

380
00:31:18,000 --> 00:31:22,000
Multiple perspectives and lots of thoughts, provoking topics and conversation there.

381
00:31:22,000 --> 00:31:24,000
So love it.

382
00:31:24,000 --> 00:31:25,000
Thank you.

383
00:31:25,000 --> 00:31:26,000
Yes.

384
00:31:26,000 --> 00:31:27,000
And thank you guys for joining us.

385
00:31:27,000 --> 00:31:29,000
Hopefully you learned something today too.

386
00:31:29,000 --> 00:31:40,000
And kind of get your thoughts going on how those things come together and what builders and developers are up against in terms of the codes and the regulations that go into each home bill.

387
00:31:40,000 --> 00:31:44,000
Thanks for joining us again today and we'll see you next time.

388
00:31:44,000 --> 00:31:45,000
Bye bye.

389
00:31:45,000 --> 00:31:48,000
Thanks for tuning into the process podcast.

390
00:31:48,000 --> 00:31:55,000
Make sure to follow us on Spotify to stay in the loop with the latest insights, project updates and everything in between.

391
00:31:55,000 --> 00:32:11,000
See you next time.