A CEO’s Insights

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Frustration with Government

As a country it seems we’re all mad at those above us. A respected commentator on the topic of metropolitan regions opined that the federal government has become nothing more “than an insurance company with an Army.” In response to the gridlock in D.C., state governments have taken issues into their own hands. 

As states have gone their own way, so goes the frustration of local governments with the Colorado General Assembly as it relates to construction defects. Metro Denver is in the midst of a great community building experiment - transit-oriented development. By the end of 2015, virtually all of the land uses along the FasTracks lines will be approved by area local governments. Without any movement on the part of the Colorado General Assembly to change construction-defect laws, there will be one glaring absence: attached, for sale, multifamily dwelling units. For the past decade condo construction has dropped steadily, due to changes in state statute and a number of court decisions. Condo construction in Metro Denver is now 4.7 percent of the total units being built. That’s down from 22 percent nearly a decade ago. Of the 4.7 percent under construction, only two percent are in price ranges attainable for young families, first-time home buyers, and the elderly.

Leadership in the Colorado General Assembly over the past several years has refused to act, claiming that the dearth of new units was simply “a market problem” that would sort out over time. It hasn’t. 

Local governments from around Metro Denver, led by frustrated members of the Metro Mayors Caucus and Douglas County Commissioners have taken this issue into their own hands - just as individual states have done with the federal government, Douglas County, Erie, and Firestone have adopted plat notes which stipulate that any construction defect incurred on land covered by the note must be solved by binding arbitration. Similar action is pending in Parker. Such requirements significantly reduce repair time and litigation costs. This month, Lakewood is exercising its home rule powers, and adopting an ordinance that follows similar lines as plat notes. This bold action comes after the City’s lengthy efforts to persuade homebuilders to construct condos along Lakewood’s rapid transit stations. The City of Lone Tree is looking at the Lakewood ordinance as it prepares for construction of the final piece of the Southeast FasTracks line. Cities like Arvada, Denver, and Aurora have seen the same absence of companies willing to take on the risk of lawsuits to build. Other cities, worried about aging citizens who are unable to downsize from the homes where they raised their kids, see this mismatch of demographics and housing as a danger to their economic future.

A broad coalition of planners, housing advocates, builders, business groups, environmental companies, and transit advocates are working hard to move legislation in the 2015 session. If the General Assembly blocks reform this year, as its leadership did last year, thousands of Colorado families will continue to live in either rental units or houses they can no longer manage. 

Let’s not make the Colorado General Assembly look like Congress. Let’s act like Coloradans. Do something positive this year.


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About Phil Kalin

Phil Kalin joined Pinnacol Assurance as CEO in 2013. He has served as the chief executive of both public and privately-backed companies, including large hospital systems, as well as organizations focused on health care data, technology and education. He has been active nationally on health care topics related to insurance, data analytics, technology innovation, cost improvement and risk mitigation. Phil is providing an informed opinion on what we see in the Monthly Economic Indicators.

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About Pinnacol

Pinnacol Assurance is the Metro Denver EDC's Research Sponsor. Pinnacol is Colorado’s leading provider of workers’ compensation insurance. Pinnacol provides comprehensive, competitively priced coverage; immediate attention to claims; a highly qualified network of medical providers; and proactive safety programs to more than 55,000 Colorado businesses. Annually, Pinnacol supports nearly $500 million of Colorado’s economic activity, spends over 35,000 hours keeping Colorado worksites safe and provides compassionate care to over 40,000 Coloradans injured on the job.

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