Left Hand Not Talking To the Right
A winning business strategy and approach is balancing the needs and demands of numerous parties and making sure everyone walks away better off. The reality of our society however is that contradictions and competing interests run amuck and rain on what should be a celebratory parade. How often do you hear about a forcing hand to ensure a new initiative or mandate that flies completely against, and counteracts, another requirement or plan? I see this constantly. Let me share a few examples.
I was talking to a real estate developer in Boston the other day who said that the city by code is requiring a 20% EV charging deployment day 1 at delivery of his new project. Concurrently, he’s trying to pass building inspections for the project and the fire department said that the number of EV chargers in the garage would pose a fire risk and thus he needed to slim down the deployment to get a passing inspection. What should he do? Why isn’t the city and the fire department working this out before this conflict? Both are taxpayer funded workers and thus on the same team. Why isn’t the left hand not speaking to the right?
*This is an asinine argument because why would an electric car (lithium-ion battery) have a greater fire risk than an internal combustion engine (a moving tank of extremely flammable gasoline) if the electrical wiring is properly set up and inspected…
I was on a call today with a friend of mine who told me that one of his assets in Seattle is out to bid for property insurance and their insurance carrier said that if they remove the chargers from the garage that their insurance premium would drop 125% per unit. Well, the city of Seattle required that exact number of EV chargers at time of development because that’s the city mandate and expectation of the state-led decisions around electrification. So what has to give? Does the insurance company need to back-off and reassess the risk? Should the city confer with the insurance companies so that this progressive initiative doesn’t further penalize their taxpayers?
Everywhere we look with new codes and requirements we see varying degrees of organized dysfunction. The rise in electric vehicle charging infrastructure is no different. That said, it’s just one example of a trend we see all the time where the lack of coordination and decision-making in a vacuum, leads to confusing outcomes when it should be a net benefit.
Unrelated to EV charging but still very relevant to us all is inclusionary zoning and impact fees. In numerous cities across America we hear about a lack of housing affordability yet every time a developer proposes a new project in Los Angeles or Washington DC, they are hit with ‘impact fees’ or affordable housing fees that make it that much more difficult to build and finance a project. I’m not saying these fees are (all) bad but if the goals for the city are to build more housing, and the economics are already really difficult, then shouldn’t all friction be removed by the city to ensure more housing gets built? Putting ‘impact fees’ (aka “a tax to build”) on a developer who is doing your city a service by providing more housing should be viewed as a contradictory statement, no?
So how do you solve these left hand right hand conundrums?
The political and diplomatic approach, (yet often times lip service) is to work together and come up with a cohesive plan. That’s a beautiful thought but it never happens that way.
Instead, solutions are found in moments of contradictory crisis. Solutions are found when a real estate developer who is staring down the barrel of an 125% premium increase on their insurance approaches the fire department and lobbies them for additional fire sprinklers in their garage and gets a notice of safety certificate to then present to both the city and the insurance company. Developer gets what he wants, a project that’s both compliant and cost-effective and dodges a contradictory bullet.