It would incentivize his sort of behavior too.
This is why a balanced regulatory approach is needed - one that is more proactive than reactive. By the time we're reacting way too much damage has been done.
Are there regulatory ways around this? Of course, but they are complex, restrict the market in other ways, and lead to different distortions.
Bonds, however, create their own host of incentive problems.
If its not built to code, the contractor didnt finish the job and will not be paid until the building is up to code.
If its a private investor building the building, thats on them, they shouldve hired better contractors or been more thorough in their management of their contractors
Flooding is a big issue right now in Toronto because we've had a few 'incidents'. You can build a building such that every drop of rain is gone from the property within minutes of it landing, straight into the storm sewers. But you can't have everyone do that, or every rainfall will mean a major flood in the lower-lying areas. And anyone in Toronto back in 2013 remembers exactly what that is like (last week too, nearly).
Instead, regulations now say that new buildings have to retain their water for as long as possible. You can release it, just not all at once, and hopefully not all of it. Green roofs are great to absorb the water. Car washes in the underground parking garage. Options like this exist, but they cost money.
This is only one example (storm water management). There are others. The goal of the city regulating certain engineering aspects of the buildings isn't just to protect those directly living in the building, it's to protect the city as a whole.
Fuck NIMBYism straight to hell, but don't tell me that the developer flooding my property isn't my problem.
My wife used to work as an engineer approving (or demanding changes) to plans for Toronto. The biggest problem is that developers will cut every-single-corner and later plead ignorance when they build the 'wrong' (cheaper) way.
Here's what would happen in the scenario you're describing: Developers would build whatever the heck they like. Then, they'd be told "You built something that doesn't meet code". The developer would say "Well, my mistake, but it's built now and do you really want to tear down this new housing development that people paid for 3 years ago?". Now you have a political situation where the people who want to move in are being told that the building has to be torn down. Politicians would get involved, and the building (not meeting code) would be allowed to stay.
This would repeat over and over again.
I completely agree that we need a straightforward set of clear, consistent rules. But the idea of pre-approval without checking what the developer plans to build, how they plan to deal with waste-water, storm-water, parking, and a long list of other requirements, that's asking for trouble.