Introduction: The Collision Course Between Policy and Risk
In the face of a nationwide housing shortage, the U.S. government is investing billions to expand access to affordable housing. But in doing so, it may be unintentionally fueling another crisis: the expansion of vulnerable communities into wildfire-prone regions.
From Northern California to Central Texas, federal funding is helping to build low- and moderate-income housing in areas with high wildfire risk. While the goal is noble—providing shelter for those who need it most—the growing overlap between climate risk zones and affordability mandates raises a sobering question:
At AWP, where we support municipalities in building water and resilience infrastructure, this trend is no longer theoretical—it’s on the ground, in the pipes, in the permitting, and in the increasingly fragile ecosystems around new housing tracts.
This article breaks down how we got here, why it’s accelerating, and what local governments and utilities must do to stay ahead of the flames.
Where Housing and Wildfire Risk Are Converging
Over the past five years, more than 20% of all new affordable housing units in Western states have been built in high or very high wildfire risk zones, according to analysis from the U.S. Forest Service and First Street Foundation.
Some examples:
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Redding, CA – In 2023, a new 62-unit low-income complex opened just miles from the Carr Fire burn scar.
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Bastrop County, TX – USDA loans and tax credits have supported new housing despite repeated wildfire evacuations.
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Colorado Front Range – Boulder County and Jefferson County have permitted LIHTC-backed housing in Wildland Urban Interface (WUI) zones.
Why is this happening?
Because land is cheaper, zoning is looser, and low-income communities have fewer options. The very reasons these areas are considered “affordable” are also what makes them risky.
How Government Funds Fuel Wildland Development
Several major funding streams are driving this expansion—none of which currently restrict spending in wildfire zones:
Low-Income Housing Tax Credit (LIHTC)
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The nation’s largest affordable housing program (~$13B annually)
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Allocated by states, often based on cost-efficiency—favoring cheaper land in fire-prone exurbs
Community Development Block Grants (CDBG)
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Distributed by HUD, including for post-disaster rebuilding
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Frequently used in California, Oregon, and Colorado for rebuilding in burn zones
USDA Section 515 and 538 Programs
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Provide rental housing financing for rural low-income tenants
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Often target underdeveloped rural land—much of it wildfire-prone
FEMA & State Resilience Grants
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Intended to harden infrastructure, but often retrofit rather than relocate
The Risks: Not Just to Homes, but Systems
Wildfires don’t just destroy houses—they compromise entire public systems. AWP works with many municipalities that have experienced:
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Loss of water pressure and hydrant functionality during firestorms
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Contaminated water systems due to melted plastic pipes and backflow events
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Damaged or inaccessible lift stations and emergency power units
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Delayed evacuation due to narrow roads and insufficient ingress/egress planning
The Wildland Urban Interface (WUI) is not only where fires start—it’s where infrastructure fails first.
Why Local Governments Are Stuck
Municipalities often have little control once land is zoned residential. Under pressure to meet housing targets and accept federal grants, local officials face a dilemma:
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Deny projects in wildfire zones and lose desperately needed housing
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Approve them and hope that mitigation—defensible space, hardened roofs, water storage—will be enough
Unfortunately, mitigation is expensive. And while some states like California have introduced WUI-specific fire codes, many towns and counties lack the staff or funding to enforce them.
Meanwhile, climate change is making wildfires more intense, less predictable, and more destructive—with fire seasons now lasting 8+ months across the West.
What Can Be Done: Smart Housing in a Hotter Future
Municipal leaders, housing developers, and infrastructure providers must take proactive steps to align affordable housing goals with climate safety:
1. Prioritize Infill Development
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Redevelop underused parcels within urban fire-safe zones rather than sprawl into risky areas
2. Update Wildfire Hazard Maps
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Use datasets from Cal Fire, FEMA, First Street, and state GIS agencies to guide permitting
3. Link Infrastructure Planning with Housing Approvals
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Require water flow analysis, emergency power redundancies, fire suppression modeling before approving projects
4. Apply for Resilience-Focused Grants
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FEMA BRIC, HUD DR, and state resilience programs offer funding for wildfire-adaptive infrastructure
5. Advocate for Federal Reform
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Push for LIHTC and HUD rules that penalize or disincentivize development in extreme risk zones
Conclusion: Building Without Burning
The housing crisis and the climate crisis are now colliding—in fire-prone forests, drought-dried plains, and overlooked rural towns.
We cannot afford to wait for the next Paradise or Lahaina before acting.
At AWP, we believe in affordable housing that lasts—not just structurally, but ecologically and systemically. We’re already working with municipalities to containerize and harden water and sewer systems, reroute infrastructure outside of fire corridors, and apply new defensible-space standards to utility planning.
Growth is coming. Wildfire risk is growing. Our infrastructure must evolve faster than the flames.
Let’s build smarter—before the next spark.
